Friday, September 02, 2005

OFHEO Housing Report

The Office of Federal Housing Enterprise oversight (OFHEO) just released their findings on housing for the 2nd quarter.

Average U.S. home prices increased 13.43 percent from the second quarter of 2004 through the second quarter of 2005. Appreciation for the most recent quarter was 3.20 percent, or an annualized rate of 12.8 percent. The new data represent the largest four-quarter increase since the second quarter of 1979.
13.43% is huge. This data only goes through the end of June. Notice how the price appreciation for the whole year is 13.43% whereas the annualized price appreciation for the second quarter is 12.8%. Thus there has been a slowdown in the rate of appreciation. I expect third quarter price appreciation of only 1 - 2%.

Nevada continues to have the highest appreciation of all states; house prices increased 28.1 percent over the past year and 5.5 percent for the quarter. However, for the first time since the fourth quarter of 2003, Las Vegas is not on the OFHEO list of the 20 fastest growing MSAs.
Nevada is a major bubble state. Glad to see that the Las Vegas market is 'simmering down'

Thirty of the 265 ranked Metropolitan Statistical Areas (MSAs) had four-quarter appreciation exceeding 25 percent.

Damn. That means over 10% of MSAs experienced year over year (yoy) price appreciation exceeding 25%. Wow.

"“The continued price increases are a result of many factors including low mortgage interest rates and the apparent impact of speculative investing," said Lawler. "The robust appreciation rates are striking both in terms of their magnitude and in their geographic scope. However, they are likely unsustainable given the underlying inflation rate, income growth and other factors".

The phrase 'apparent impact of speculative investing' should read 'considerable impact of speculative investing'.

Its is also worthy to note that of the "Top 20 Metropolitan Statistical Areas and Divisions With Highest Rates of House Price Appreciation" a full 14 of them were either in Florida or California.

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