Here's how home prices in the Baltimore metro area have changed over the decade, according to a new housing-market index. If it looks like the roller coaster is more up than down, FNC Inc. -- a mortgage technology firm that put the index together -- says you're not seeing things.
Prices in the Baltimore region appreciated more since 2003 than other large metro areas, according to FNC. Using a combination of sale prices, appraisals and property records, it calculates a 7 percent annual increase in our area. U.S. home values rose a little more than half a percent annually over the same period, FNC says.
FNC, which runs the AppraisalPort program used by lenders, explains here how its index works.
There are a lot of competing indexes out there, each with its strengths and weaknesses.
The Federal Housing Finance Agency, for instance, uses repeat sales and refinancing transactions in order to compare how the same homes change in value over time. That's designed to avoid the apples-to-oranges problem you can get when you simply tally up all the home sales in one period and compare them to all the (mostly different) homes sold the year before.
But the FHFA draws only from Fannie Mae and Freddie Mac data, so it's missing the subprime and jumbo-loan craziness of the boom years. It's also missing all the homes that didn't sell or refinance more than once. That's what Zillow's Zestimates tries to fix by offering estimates on every home, whether it sold or not. Zestimates, though, have been oft-criticized as inaccurate. So it's no easy thing, designing a home-value measurement that's wide-reaching and unimpeachable.
FNC's index, like Zillow's Zestimates, is trying to get at the entire universe of homes: "Since all the properties do not sell, a model must be created to price all of the major attributes of a house (i.e. location, gross living area, age, lot size, bedrooms, bathrooms, etc.) and then compute an estimated market price for each property," it says on its site. "The value of each of the attributes is estimated based on the observed properties that do sell over an extended window."
Because it adds appraisal information to the mix, FNC says its index has "the physical property characteristic data that is often missing from public records." (It has been criticized by appraisers for culling that information from appraisals added to AppraisalPort, as it happens.)
What do you think of this index? Does the value change match up with your sense of the market?