Buying & Selling: Slow Down

The Office of Federal Housing Enterprise Oversight released its 2nd-quarter Home Price Index Report, and the news is...interesting, to say the least. Among the findings:

U.S. home prices continued to rise in the second quarter of this year but the
rate of increase fell sharply. Home prices were 10.06 percent higher in the second quarter of 2006
than they were one year earlier. Appreciation for the most recent quarter was 1.17 percent, or an
annualized rate of 4.68 percent. The quarterly rate reflects a sharp decline of more than one
percentage point from the previous quarter and is the lowest rate of appreciation since the fourth
quarter of 1999. The decline in the quarterly rate over the past year is the sharpest since the beginning
of OFHEO’s House Price Index (HPI) in 1975....

Price appreciation remains relatively robust in the two states hardest hit by Hurricane Katrina
one year ago—Louisiana and Mississippi. Four-quarter appreciation rates were well above
the national average in several cities in the area including: New Orleans-Metairie-Kenner,Gulfport-Biloxi, Baton Rouge, and Pascagoula. Gulfport-Biloxi and Pascagoula in fact logged
their highest appreciation rates since the beginning of OFHEO’s Index....

And so on. The report gauges highest price appreciation in Arizona (aka Bubble Market Central), and precipitous decreases in the Mid-Atlantic, heavy decreases in Michigan, and jumps in the Carolinas.

All of this makes sense when you look back over the news of the past year. Real estate is going cheap in the Gulf Coast for specuvestors, commercial developers, and business. Michigan's economy is in the toilet. The Carolinas are still the tourist destination of choice for overprivileged East Coasters, even though their overall economic health sucks too. :)

One overall point the report makes is that not only are areas with recently high appreciation rates suffering a sudden sharp deceleration, but that they've been suffering a continual slow deceleration since Spring 2005. I'll let the report take it from here:

In many states, price appreciation rates have declined rather dramatically. Higher interest
rates and greater inventory levels are apparently having a significant impact, with the largest
effects being felt in areas that have recently experienced the greatest appreciation.

Looks like this bustout is going to be anything but soft, orderly, or moderated.

More coverage from Reuters, MarketWatch, and The Business Journal.

Posted at September 5, 2006 07:52 PM

digg this story

Trackback Pings

TrackBack URL for this entry:
http://weblog.housing.com/cgi-bin/mt/mt-tb.cgi/234

The Office of Federal Housing Enterprise Oversight released its 2nd-quarter Home Price Index Report, and the news is...interesting, to say the least. Among the findings: U.S. home prices continued to rise in the second quarter of this year but the rate of increase fell sharply. Home prices were 10.06 percent higher in the second quarter of 2006 than they were one year earlier. Appreciation for the most recent quarter was 1.17 percent, or an annualized rate of 4.68 percent. The quarterly rate reflects a sharp decline of more than one percentage point from the previous quarter and is the lowest rate of appreciation since the fourth quarter of 1999. The decline in the quarterly rate over the past year is the sharpest since the beginning of OFHEO’s House Price Index (HPI) in 1975.... Price appreciation remains relatively robust in the two states hardest hit by Hurricane Katrina one year ago—Louisiana and Mississippi. Four-quarter appreciation rates were well above the national average in several cities in the area including: New Orleans-Metairie-Kenner,Gulfport-Biloxi, Baton Rouge, and Pascagoula. Gulfport-Biloxi and Pascagoula in fact logged their highest appreciation rates since the beginning of OFHEO’s Index.... And so on. The report gauges highest price appreciation in Arizona (aka Bubble Market Central), and precipitous decreases in the Mid-Atlantic, heavy decreases in Michigan, and jumps in the Carolinas. All of this makes sense when you look back over the news of the past year. Real estate is going cheap in the Gulf Coast for specuvestors, commercial developers, and business. Michigan's economy is in the toilet. The Carolinas are still the tourist destination of choice for overprivileged East Coasters, even though their overall economic health sucks too. :) One overall point the report makes is that not only are areas with recently high appreciation rates suffering a sudden sharp deceleration, but that they've been suffering a continual slow deceleration since Spring 2005. I'll let the report take it from here: In many states, price appreciation rates have declined rather dramatically. Higher interest rates and greater inventory levels are apparently having a significant impact, with the largest effects being felt in areas that have recently experienced the greatest appreciation. Looks like this bustout is going to be anything but soft, orderly, or moderated. More coverage from Reuters, MarketWatch, and The Business Journal.