Home Mortgage Weblog

Though there is a lot of talk about a dip in the US realty prices, it is yet to show up in the price data. Latest results show that realty prices are still robust. Median home prices in January 2006 were steady at $211,000.

Latest results from the Office of Federal Housing Enterprise Oversight (OFHEO), the U.S. agency that monitors mortgage lenders Fannie Mae and Freddie Mac, average realty prices in the residential sector grew a robust 13 % through the fourth quarter of 2005. The growth in the top 10 markets was higher at 18 % for the same period.

The OFHEO report also segregates the country into areas that are experiencing robust growth vs regions with flattened prices. Prices on the coasts and in the growing areas of the West and the South were soaring, while they were flat in the middle and the northern regions.

In the high growth regions like Arizona, prices appreciated by 35 %, Florida 27 %, California 21 %, Washington 18% and New Jersey 16 %. Growth in Phoenix was at a high of 40 %.

Some states that experienced growth of lower that 5 % include Michigan, Ohio, Nebraska, Indiana and Kansas.

Realty prices are expected to start their southward march soon and the US Fed’s next move on interest rates will largely govern the velocity of the decline. Analysis of the price data reveals that while prices in some regions had shot up substantially, the increase in other regions was moderate. In the likely scenario of a dip, prices that had grown too rapidly will experience rapid declines. On the other hand regions, where prices had grown moderately are likely to experience stagnation or a moderate dip.

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