Montgomery, AL Federal Housing Finance Agency Home Price Index (FHFA HPI)

The Montgomery, AL, Federal Housing Finance Agency (FHFA) House Price Index (HPI) is a weighted, repeat-sales index measuring average price changes in single-family houses in the metropolitan statistical area. The HPI is a valuable tool for tracking house price trends at the regional level.

Between 2000 and 2006, home prices in the Montgomery metro area increased by an average of 4.5% per year. In 2007, prices began to decline, and by 2011 they had fallen by an average of 6.4% per year. The sharpest declines were seen in 2008 and 2009, when prices fell by 11.1% and 10.0%, respectively. Since bottoming out in 2011, prices have recovered somewhat, but remain well below their pre-recession levels. In 2016, the HPI was 95.3 (meaning that home prices were 4.7% below their 2000 level).

There are several factors that have contributed to the decline in home prices in Montgomery since 2007. The most important factor has been the weak economy; as job losses mount and incomes stagnate or decline, people are less able to afford a home purchase or keep up with their mortgage payments if they do buy a home. Another important factor has been the rise in foreclosures; as more and more homeowners enter foreclosure proceedings, this puts downward pressure on prices as banks try to sell these properties quickly at low prices to recoup their losses. Finally, tight credit conditions have made it difficult for potential buyers to obtain financing for a purchase; this has further restrained demand and put downward pressure on prices