Santa Rosa-Petaluma, CA Federal Housing Finance Agency Home Price Index (FHFA HPI)

The Santa Rosa-Petaluma, CA, 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 Santa Rosa-Petaluma metropolitan area. The HPI is a market-based measure of house prices and is designed to provide a timely indication of house price trends.

The Santa Rosa-Petaluma HPI value for September 2020 was 327.42, up 0.32% from August and up 7.09% from September 2019. This was the fourth consecutive month of positive year-over-year growth in the Santa Rosa-Petaluma HPI and the largest annual increase since June 2018. On a month-over-month basis, prices have increased in each of the last four months, with an average monthly increase of 0.29%.

As of September 2020, home equity in the Santa Rosa metro area stood at $159 billion, an increase of $15 billion from one year ago and $4 billion from August 2020. Home equity as a share of homeowners' total housing wealth has increased steadily over the past year, reaching 58% in September 2020 compared to 54% one year ago and 49% in September 2019. The rise in home equity has been driven by both rising home prices and declining mortgage debt levels.

In recent years, there has been growing concern about whether or not US house prices are sustainable. However, data from the FHFA shows that prices in the Santa Rosa metro area are still well below their pre-recession peak levels and remain affordable relative to incomes and rents. In addition, while there has been some slowdown in price growth recently, it appears that this is largely due to affordability constraints rather than any weakening in underlying demand conditions. Overall, we believe that US house prices are likely to continue to rise modestly over the next few years as the economy continues to recover from the pandemic shock