New Housing Price Index Out - HECM Variances Updated
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The Office of Federal Housing Enterprise Oversight (OFHEO) has released its Housing Price Index (HPI) for the quarter ended December 31, 2006. The HPI is a measure of the movement of single-family house prices around the country.
We use data from the HPI to construct the HECM Rate Variance Tool. This tool simply compares Housing Price Index changes to the average rate charged on HECM reverse mortgage loans for the same period. This guidepost provides reverse mortgage borrowers and potential borrowers with a guidepost as to how “reverse mortgage friendly” their local community is.
Areas showing large positive variances area communities where home values rose at a faster rate than the average inteest charged on a HECM monthly-adjusting loan for the same period of time. Low or negative variances indicate communities where net home equity is being diminished not only by a growing reverse mortgage balances, but by stagnant or declining home values.
We believe five-year data provides a better guidepost of the “reverse mortgage friendliness” of any given area since year-to-year abberations are smoothed. Based on the just released OFHEO data, here are the Top 10 and Bottom 10 Reverse Mortgage Friendly housing markets:
| 5-Year Annual Average | 5-Year Avg HECM Rate | 5-Year Variance | |
| Top 10 Reverse Mortgage Friendly Markets | |||
|---|---|---|---|
| Madera, CA | 28.03 | 4.24 | 23.79 |
| Bakersfield, CA | 27.89 | 4.24 | 23.65 |
| Riverside-San Bernardino-Ontario, CA | 27.52 | 4.24 | 23.28 |
| Miami-Miami Beach-Kendall, FL (MSAD) | 26.92 | 4.24 | 22.68 |
| Fresno, CA | 26.62 | 4.24 | 22.38 |
| Los Angeles-Long Beach-Glendale, CA (MSAD) | 26.38 | 4.24 | 22.14 |
| Naples-Marco Island, FL | 25.53 | 4.24 | 21.29 |
| Port St. Lucie, FL | 24.94 | 4.24 | 20.70 |
| West Palm Beach-Boca Raton-Boynton Beach, FL (MSAD) | 24.64 | 4.24 | 20.40 |
| Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (MSAD) | 24.63 | 4.24 | 20.39 |
| United States | 11.04 | 4.24 | 6.80 |
| Bottom 10 Reverse Mortgage Friendly Markets | |||
| Saginaw-Saginaw Township North, MI | 2.52 | 4.24 | -1.72 |
| Flint, MI | 2.52 | 4.24 | -1.72 |
| Springfield, OH | 2.39 | 4.24 | -1.85 |
| Fort Wayne, IN | 2.38 | 4.24 | -1.86 |
| Canton-Massillon, OH | 2.31 | 4.24 | -1.93 |
| Burlington, NC | 2.25 | 4.24 | -1.99 |
| Detroit-Livonia-Dearborn, MI (MSAD) | 2.17 | 4.24 | -2.07 |
| Lafayette, IN | 1.63 | 4.24 | -2.61 |
| Anderson, IN | 1.62 | 4.24 | -2.62 |
| Kokomo, IN | 1.23 | 4.24 | -3.01 |
Article Series - RM Friendliness
- Reverse Mortgages and Home Price Appreciation
- New Housing Price Index Out - HECM Variances Updated
- Reverse Mortgage Friendliness Index Updated
- Thoughts on Reverse Mortgages in a Down Housing Market
- Reverse Mortgage Friendliness Update (2Q 2007)
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