OC 4th-HIGHEST IN US HOME PRICE GAINS

By Jeff Collins

In the midst of a week filled gloomy housing news, a glimmer of sunshine has broken through.

Sure, Orange County house sales may be down for the first time in two years and new home sales contracts may be down 35%.

But things are looking up in O.C.’s housing market, if you believe the Federal Housing Finance Administration – the agency that oversees Fannie and Freddie. According to FHFA, Orange County’s home-price appreciation was fourth highest among 303 of the nation’s metro areas this past spring.

That’s right, we’re Number 4 according to the federal government’s House Price Index, which dates back 35 years.

Based on FHFA math — which compares repeat transactions involving Fannie and Freddie loans for home purchases and refinancing — O.C. home prices increased 1.45% in the 12 months ending on June 30.

Of course, that’s old data, preceding the end of federal tax credits and the damper their demise put on billowing home sales.

And it gives you a sense of how bad things must be in the rest of the country. After all, Orange County was able to elbow it’s way up to Number 4 in the nation with an appreciation rate of just 1.45%.

Still:

* It’s the first time in the federal HPI that O.C. home values increased since the winter of 2007. The HPI pegged O.C. values as dropping from year-ago levels for the past three years, with values down as much as 18.2%.
* The HPI determined that home values were up 0.36 of a percent from the first quarter of 2010.
* However, the HPI pegs local home values as down 17.18% from where they were five years ago — in the spring of 2005. That was two years before O.C. home prices reached their peak.
* The HPI puts just three other U.S. metro areas ahead of O.C.: Springfield, Ill., with prices up 2.68%; Dubuque, Iowa, with prices up 2.41%; and San Jose, with prices up 1.89%.
* Nationally, U.S. home prices fell 4.9% in the year ending June 30, according to the HPI.
* O.C. ranked high in the HPI’s fourth quarter 2009 results — Number 1 in the nation. But that was in a relatively new index that includes the nation’s biggest 25 metro areas only. That index is based on purchase loans only.
* In the traditional index, which is based on both purchases and appraisals from refinance loans, O.C. home prices were down 2.18% in the fourth quarter of 2009, and the county ranked 111th in the nation.

The FHFA index’s strength is that — like the S&P Case-Shiller Index — it pairs a property’s appraisal with that same property’s past appraisals. But its weakness is it’s based entirely on loans of $417,000 or less, leaving out the market’s distressed high end.