Most Local Markets Show Net Growth In Home Values

In a recent article in the Los Angeles Times, a recent survey by the Federal Housing Finance Agency (FHFA) shows the majority of homes in metropolitan markets gain in net value over the course of five years, demonstrating the long-term value of homeownership.

MAKING SENSE OF THE STORY FOR CONSUMERS

· According to the Federal Housing Finance Agency’s (FHFA) third quarter survey, 273 metropolitan markets, out of 292, showed positive net home values over a five-year period, with only 19 markets showing home value depreciation during the same time. Unlike stocks, which can change dramatically from one day to the next, house values tend to appreciate and depreciate at a slower rate and prove to be more durable over extended periods of time. Most owner-occupied homes increase in value over a five-year period, excep for those areas with a severely depressed local economy. Homes owned and occupied for at least five years have an average annual rate of return of nearly 12 percent, according to statistics gathered by C.A.R. over the last 40 years.
· Although homes have declined in value over the past year, many homes purchased five years ago or earlier are net positive overall. In Los Angeles, homes purchased five years ago or earlier have declined approximately 18.8 percent in value over the last year, but have gained an average of 31.9 percent over a five-year period. In San Francisco, despite home values declining an average of 8 percent over the past year, the average home has gained in value an estimated 31.9 percent over five years.

To read the full story, please click here:http://www.latimes.com/business/la-fi-harney7-2008dec07,0,5500307.story