If you read this blog regularly, you’ve probably seen the brief updates of the Saint Paul
real estate markets that appear every month. Most recently, statistics for October are available. And if you’ve seen those posts, or have paid any sort of attention to the real estate market, you’ve probably seen that housing prices have fallen compared to last year. If you look back a few years more, though, the news may not be so bad.
The most recent statistics on housing prices, released on November 25 by the Federal Housing Finance Agency, show that while homeowners nationally have lost more than $1 trillion in equity since the housing market began to crumble, 273 of 292 metropolitan markets still show cumulative real estate value growth over the past 5 years. The third-quarter survey showed negative net home values over the last five years in just 19 markets.
For the state of Minnesota, though overall the average price of homes sold during the third quarter of the fiscal year was down -4.33% compared to the year before, its still 16.30% more than what homes were selling for in 2003. For the Minneapolis, Saint Paul, and Bloomington metropolis area, prices were down -6.47% compared to last year, but prices were still 12.19% higher than five years ago. That may be of little comfort to homeowners who bought houses when residential real estate was approaching its peak in 2005, but Twin Cities residents that have been in their houses longer will feel a little relief knowing that there is still significant value in their homes. It is also important information for potential home buyers that may be considering purchasing a home, for the short or long term.
In most cases, people who own houses for five to 10 years are likely to see positive growth in its value. Even in times like now when values have taken a hit, unless the local economy is severely depressed (and remember that real estate is highly local), you're likely to see positive growth in a home’s worth.
Among the top markets for cumulative real estate value gains over the past 60 months are as follows: Honolulu is up 78.7%, Virginia Beach, Va. is up 72.6%, Flagstaff, Ariz. is up 66.5%, Bellingham, Wash. is up 65.6%, Wilmington, N.C. is up 62.1%, and Baltimore is up 60.6%.
The worst performing real estate markets over the past 5 years show: Detroit down 18.4%, Merced and Stockton, Calif. are both down 15%, Washington, D.C., and its suburbs are down 12.5%, the cumulative gain for homeowners over the past 60 months has been 43.7 percent..
The FHFA's quarterly data track price changes in several hundred local markets back to 1975. Unlike other indexes which may omit entire states or may give extra weight to historically volatile areas, the FHFA provides information for every metropolitan market throughout the nation. Its data are based on repeat home sale and refinancing transactions where mortgages were funded, owned or contained in securities backed by Fannie Mae and Freddie Mac. As a result, the properties tracked do not include houses financed with jumbo loans, and the survey data under represent the subprime slice of the total marketplace. The complete 85-page survey is available at www.fhfa.gov.