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March 25, 2008

Growth in non-metropolitan housing prices in Pennsylvania

Today the Office of Federal Housing Enterprise Oversight (OFHEO) released new data on housing prices in January. The new data is from a seasonally adjusted monthly index which for the time being is only available by census division. In the Mid-Atlantic region which includes Pennsylvania, New York, and New Jersey housing prices before adjusting for inflation fell by 0.4% from December to January.

The OFHEO did however also recently release a new index of housing price data for Pennsylvania. The new data covers housing prices in non-metropolitan Pennsylvania between the 1st quarter of 1995 and the 4th quarter of 2007.

Before presenting the numbers let me briefly discuss housing prices and inflation. For the majority of Pennsylvanian's their homes represent their most valuable asset. Just like when a stock price rises, rising housing prices mean that Pennsylvanian's have more wealth. Just how much more wealth they have depends on what is happening to the overall price level (measured here as consumer prices less shelter). So in Pennsylvania from the 4th quarter of 2006 to the 4th quarter of 2007 housing prices increased by 2.8% but since over the same period consumer prices increased by 2.8% the value of Pennsylvania homes was unchanged.
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Before adjusting for inflation housing prices in non-metropolitan Pennsylvania increased by 3.3% in the 4th quarter of 2007. Factoring in inflation, housing prices increased slightly 0.5% in the region. Like in many parts of Pennsylvania there has been a sharp slowing of the growth in housing prices in non-metropolitan Pennsylvania compared to the recent past. Overall between 2001 and 2006 inflation-adjusted housing prices rose by 31% in non-metropolitan Pennsylvania. Before adjusting for inflation housing prices rose by 54% in non-metropolitan Pennsylvania.
nonmetro_0106 (456 x 312).gif
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Given the widespread growth in housing prices it is no surprise that subprime loans (see our estimates of the subprime share of all mortgages originated by county in Pennsylvania) even in non-metropolitan counties became an important source of financing for many families.

--Mark Price

Posted by Price at March 25, 2008 04:40 PM


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