Grand Rapids-Kentwood, MI Federal Housing Finance Agency Home Price Index (FHFA HPI)

The Grand Rapids-Kentwood, MI, 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 and condominiums in the Grand Rapids-Kentwood metropolitan statistical area (MSA), which includes all of Kent and Ottawa counties.

The FHFA HPI for Grand Rapids-Kentwood peaked in April 2006 at 222.6 and then declined steadily until bottoming out in March 2011 at 138.9, a 38 percent drop from the peak. From the bottom, the index has risen modestly, reaching 153.1 as of December 2016, still about 30 percent below the pre-recession peak but nearly 12 percent above where it was just five years earlier.

Home prices are important not only to homeowners and would-be homeowners but also to builders, real estate agents, lenders and others involved in housing market transactions. The FHFA HPI is used by economists to help forecast consumer spending and economic activity more broadly; by policy makers to monitor housing market conditions; and by academics to study issues related to housing markets and household finance.

There are several reasons why home prices in Grand Rapids have not yet recovered fully from their pre-recession levels despite strong job growth in recent years. One reason is that many potential buyers remain cautious about making such a large purchase after witnessing firsthand or hearing about friends’ or family members’ experiences with foreclosure during the recession. Another reason is that some people who would like to buy a home are unable to do so because they cannot obtain financing due to tight credit standards post-recession. Additionally, some people may be waiting for prices to increase further before entering the market as sellers because they do not want to sell their home for less than what they paid for it or owe on their mortgage loan balance.