Posted April 22, 2014

Bolstered By Low Mortgage Rates, U.S. Home Values Still Rising — Even Through Cold, Snowy Winter

FHFA : U.S. home values increased in February 2014. Values are near a 6-year high nationwide.

FHFA : U.S. home values increased in February 2014. Values are near a 6-year high nationwide.

Home values advanced again in February, led by strong gains in "warmer" U.S. regions. 

According to the monthly Home Price Index from the Federal Home Finance Agency (FHFA), values increased 0.6 percent nationwide to reach levels not seen since June 2008.

Values are now less than seven percent from last decade's peak. Slowly and steadily, the U.S. housing market's recovery continues.

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Home Values Highest Since June 2008

Each month, the government's Federal Home Finance Agency publishes its Home Price Index (HPI), a home-valuation tracker based on data supplied to Fannie Mae and Freddie Mac during the mortgage loan approval process.

The Home Price Index measures the change in a home's appraised value from mortgage loan-to-mortgage loan. By tracking these changes, the FHFA can see how a home's value has increased or decreased over time.

The February 2014 Home Price Index shows home values climbing 0.6 percent as compared to the month prior -- the third straight month through which home values increased.

Prior to the current win streak, values had climbed through 21 straight months.

It's noteworthy that values rose in February, and the preceding two months, because analysts predicted  that unusually cold weather and record-setting snow cover would  result in a winter housing market slowdown.

In some respects, the analysts were correct. Winter Housing Starts dropped, as did home sales across much of the country. Yet, neither stopped the rise in U.S. home values.

Scarce housing supplies and pent-up demand continue to move home prices higher. And, as today's active buyers know, right-priced homes sell quickly and often for more than their list price.

Housing remains a seller's market.

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Washington, California Homes Gain Most

A deeper look at the FHFA Home Price Index shows that, although U.S. home values rose 0.6% in February, gains were uneven by region.

For example, values in the Middle Atlantic Region, an area which includes New York, New Jersey, and Pennsylvania, slipped 1.6 percent in February. This followed a strong January, however, in which the region outperformed all other regions nationwide.

West Region values, meanwhile, climbed 1.4 percent over the same one-month period, out-gaining all other regions.. The West Region includes California, Oregon and Washington.

By region, the February 2014 FHFA Home Price Index shows the following  :

  •  Pacific Region (Hawaii, Alaska, Washington, Oregon, California) : +1.4%
  • Mountain Region (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico) : +1.2%
  • West North Central Region (North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas, Missouri) : 0.0%
  • West South Central Region (Oklahoma, Arkansas, Texas, Louisiana) : +1.1%
  • East North Central Region (Michigan, Wisconsin, Illinois, Indiana, Ohio) : +0.8%
  • East South Central Region (Kentucky, Tennessee, Mississippi, Alabama) : +0.4%
  • New England Region (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut) : -2.5%
  • Middle Atlantic Region (New York, New Jersey, Pennsylvania) : -1.6%
  • South Atlantic Region (Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida) : +1.7%

With the exceptions of the northeast part of the country, nearly all regions show home values at multi-year highs.

Remember, though -- this data is from before the start of warmer weather. The spring housing season tends to increase the number of buyers actively buying homes, which can pressure home values higher.

Furthermore, keep in mind that real estate is local. What's true for a region may not be true for its member states, or even cities and neighborhoods. The Lincoln Park neighborhood of Chicago, for example, is distinct from Lakeview even though they're geographical neighbors.

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Low-Downpayment Mortgages Help Home Buyers

With home values rising, today's home buyers face higher loan downpayments as compared to recent years.

This is because the size of a twenty percent downpayment is based on a home's sales price. As home prices rises, downpayment amounts rise, too.

Thankfully, there is an abundance of low- and no-downpayment options for today's U.S. home buyer, including the FHA mortgage program which allows for a downpayment of just 3.5 percent.  

FHA mortgages are available in all 50 states and there are no special qualification standards.

Among the benefits of the FHA loan is that it allows cash downpayment gifts; it allows credit scores of 580 or lower; and, it can be "assumed" by a subsequent home buyer which means that, when you sell your home, the buyer can assume your FHA mortgage and its low rate, too.

For members of the military and their families, the Department of Veterans Affairs makes available the zero-downpayment VA loan. VA loans are also assumable and carry the added benefit of not requiring mortgage insurance.

There is also 100% USDA mortgage loan. Officially called the USDA Rural Housing Loan, the USDA's no-downpayment option is somewhat mis-named. The program is available in more than just rural U.S. areas -- it's available in suburban areas, too.

In order to qualify for the USDA 100% mortgage, the area in which the home is located must not be densely populated.

Lastly, there are a number of 5% downpayment programs available via Fannie Mae and Freddie Mac including their standard purchase program and the HomePath Mortgage for foreclosed homes.

Get Today's Live Mortgage Rates

Home values are on the rise. Slowly and steadily, prices are increasing. Mortgage rates, though, remain low which has helped to keep monthly mortgage payments low.

Compare today's mortgage rates and see how much home you can afford. Mortgage rates are available online at no cost and with no obligation to proceed. Your social security number is not required to get started.

Click here for today's mortgage rates.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2014 Conforming & FHA Loan Limits

Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.