HISTORICAL U.S. MEDIAN HOME PRICES
MEDIAN HOME PRICE
ANNUAL HOME PRICE APPRECIATION
12.5%
10%
8.4%
$300,000
6.6% 7.1%
6.7%
5.6%
5.5%
5%
$250,000
2.3%
0%
$200,000
-1.8%
-3.1%
-5%
$150,000
$248,000
-6.3%
$235,000
$225,000
$219,500
$218,000
$220,000
$206,000
$190,000
$190,319
$180,000
$163,000
-10%
$100,000
$160,000
$160,000
$150,000
-12.7%
-14.4%
-15%
$50,000
-20%
$ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
mined on the basis of the sales price or the appraised value, whichever is less. Increasingly, appraisals are being replaced through the use of automated valuation models (AVMs). Last year, government regulators proposed raising the minimum threshold for residential appraisals from $250,000 to $400,000. If ap- proved, the new standard is expect- ed to exempt 214,000 homes from appraisal requirement. Appraisals — independent valuations which include a physical examination inside the property — reduce risk by ensuring the property exists and has a given market worth. Fourth, real estate cash pric- es in most areas have increased over time if only as a by-product of inflation. ATTOM Data Solutions reported that median home prices for 2018 reached $248,000, up 5.5 percent from last year. The 2018 price increase represented the 7th
consecutive annual home price appreciation. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 5.2 per- cent annual gain in November 2018. As cash prices rise, borrowers who face financial difficulties are in- creasingly able to sell their homes, fully repay their loans, and avoid foreclosure. Rising prices make it possible for borrowers to avoid damning financial dings while inves- tors are fully repaid. (Alternatively, inflation erodes buying power and that’s an investor concern.) The protective benefits associated with rising prices can be readily seen with foreclosure numbers. ATTOM Data Solutions reported that fore- closure filings for 2018 — default notices, scheduled auctions and bank repossessions — were down 8 percent from 2017 and reduced 78 percent from the 2010 peak. The catch, of course, is that broad
national housing trends may not reflect local markets. Todd Teta, ATTOM Data Solution’s Chief Product Officer, explained that while foreclosure filings were widely down, there “was also some evidence of distress gradually returning to the housing market in 2018, with foreclo- sure starts increasing from the previ- ous year in more than one-third of all state and local housing markets. “Some of that distress was driven by natural disasters, most notably in Houston, where foreclosure starts in- creased 61 percent,” Teta continued. “But natural disasters do not explain the increase in markets such as De- troit, Minneapolis-St. Paul, Milwau- kee and Austin – all of which posted double-digit percentage increases in foreclosure starts in 2018."
FULL FAITH & CREDIT Prior to the mortgage meltdown,
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