Fayetteville-Springdale-Rogers, AR Federal Housing Finance Agency Home Price Index (FHFA HPI)

The Fayetteville-Springdale-Rogers, AR, Federal Housing Finance Agency (FHFA) House Price Index (HPI) is a weighted, repeat-sales index that measures average price changes in repeat sales or refinancings on the same properties. The index covers single-family homes in the nine-county metropolitan statistical area of Fayetteville-Springdale-Rogers, AR.

Between 2000 and 2003, home prices in the Fayetteville-Springdale-Rogers metro area increased rapidly, more than doubling from a HPI of 100 in 2000 to a peak of 213.9 in 2003 (see Figure 1). This increase was driven by strong economic and population growth as well as low interest rates. After reaching its peak in 2003, the HPI began to decline, falling to a low of 133.4 in 2011. Since then, home prices have recovered somewhat, but remain below their pre-recession levels. As of 2019 Q1, the HPI stood at 158.3.

The rapid increase in home prices between 2000 and 2003 led to a corresponding increase in home equity for homeowners in the metro area. Home equity is the portion of a property’s value that is owned by the homeowner; it can be thought of as “equity built up” through appreciation or paying down a mortgage loan balance. In 2000, homeowners had an average of $21,600 in equity; by 2003 this had more than doubled to $45,700 (see Figure 2). However, with the decline in home prices that began in 2004 equity levels also fell sharply; by 2011 they had declined to an average of $22,100. While equity levels have recovered somewhat since then – they stood at $33,400 as of 2019 Q1 – they remain well below their pre-recession peaks.

The relationship between house prices and home equity is important because it affects both household wealth and borrowing capacity. Homeowners with high levels of equity are typically able to borrow against it using methods such as home equity lines of credit or cash-out refinances; this can provide them with extra funds for things like renovations or investments. Conversely, when house prices fall and equity declines homeowners may find themselves “underwater” on their mortgages (i.,e., owing more than their homes are worth), which can make it difficult or impossible to sell without incurring a loss or having difficulty qualifying for refinancing options..