Low Mortgage Rates Helping To Push Home Values Near 2007 Peak

Home Values Highest Since November 2007

Home values continue to climb.

According to the FHFA Home Price Index, property values rose nationwide in January, marking the fourteenth straight month of home price growth. Home values are up 5.1% percent from last year and continue to move higher as the 2015 Housing Market begins.

Demand for homes is outweighing supply in many U.S. markets; and, today’s mortgage rates are so low that they’re changing the economics of “Buy vs Rent”.

Freddie Mac has reported the average 30-year mortgage rates at 3.78% — the 18th straight week that rates have been sub-4 percent. Buyer purchasing power is on the rise and low- and no-downpayment mortgages remain readily available.

It’s an excellent time to be a U.S. home buyer.

Click to see today’s rates.

Home Price Index Hit 86-Month Best

The FHFA Home Price Index is a product of the Federal Home Finance Agency (FHFA). It tracks changes in a home’s value between subsequent sales. Data is supplied via Fannie Mae and Freddie Mac as part of the mortgage approval process.

The Home Price Index is benchmarked to a value of 100, which is meant to represent the U.S. housing market as it existed in 1991.

In January 2015, the Home Price Index climbed to 219.0 — its highest reading since November 2007.

November 2007 is a significant date as compared to today’s U.S. housing market. During that month, last decade’s housing downturn was less than 12 months old and home values had yet to drop in many U.S. markets. Furthermore, the Housing and Recovery Act had yet to be created; and the HARP refinance program was still more than twelve months from its launch.

Home prices are now just 3.5 percent below the valuation peak, which was set in March 2007.

The January Home Price Index shows a housing market in expansion, with home prices growing at a more rapid pace as compared to mid-2014. Demand for homes outpaces the supply of them, and listing prices for home are rising. Competition for homes remain fierce.

According to the National Association of REALTORS®, more than one-third of homes for sale sell in 30 days or fewer. For today’s buyers, it’s become tough to find great, inexpensively-priced homes.

Thankfully, current mortgage rates are cheap.

Freddie Mac’s weekly mortgage rate survey puts the 30-year conventional fixed-rate mortgage at 3.78 percent, on average, nationwide.

Lenders now quote mortgage rates and APRs in the mid-3s regularly, and adjustable-rate mortgage rates are as low as the 2s. FHA and VA mortgage rates are even lower.

Low mortgage rates give buyers extra purchasing power and expanded home affordability.

Click to see today’s rates.

Michigan, Illinois, Ohio Lead Winners

The FHFA’s Purchase-Only Home Price Index rose is up 5.1% from one year ago. The index is at its highest point in more than 7 years.

Home values should not be considered on a national level, however. The Home Price Index examines housing broadly, and does little to capture buyer-seller activity in any one state, city, or neighborhood.

The Home Price Index does group its findings by region, however, and, in November, the East South Central region led all U.S. markets, expanding 2.3% from the month prior. The South Atlantic region was the laggard, losing 0.4 percent, on average.

Over the last 12 months, home price growth has varied by region:

  • Pacific : +8.2% (Hawaii, Alaska, Washington, Oregon, California)
  • Mountain : +6.5% (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona)
  • Middle Atlantic : +1.7% (New York, New Jersey, Pennsylvania)
  • East North Central : +4.8% (Michigan, Wisconsin, Illinois, Indiana, Ohio)
  • South Atlantic : 4.1% (Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida)

The New England Region, an area which includes Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut is +2.9 percent since last year.

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