Virginia Beach-Norfolk-Newport News, VA-NC Federal Housing Finance Agency Home Price Index (FHFA HPI)

The Virginia Beach-Norfolk-Newport News, VA-NC, 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 Virginia Beach metropolitan area. The HPI is a broad measure of the movement of single-family house prices and covers both new and existing houses.

The FHFA HPI for the Virginia Beach metro area was 176.874 in the first quarter of 2020, down 0.9 percent from its peak in the second quarter of 2018 but up 2.7 percent from its trough in the first quarter of 2019.

Home equity is the portion of a home's value that is owned outright by the homeowner, free and clear of any liens or mortgages. In other words, it's the amount of money that would be left over if you sold your home and paid off all debts associated with it – including your mortgage balance, any outstanding home equity loans or lines of credit, and any other liens on your property.

In general, as home prices rise, so does home equity. That's because when you buy a home with a mortgage loan, you typically only finance a portion of its purchase price (the rest goes into your down payment). So as your home appreciates over time and its value goes up – assuming your mortgage balance doesn't also increase – more and more equity builds up in your property.

This relationship between house prices and equity can be seen clearly in the Virginia Beach metro area over the past few years. As shown in the FHFA HPI data above, prices peaked in mid-2018 before falling slightly and then leveling off through 2019 and early 2020. During this same time period, household debt levels also increased – meaning that even though prices were rising (albeit at a slower pace), homeowners were building up less equity than they had been previously.

As we enter into 2021, it will be interesting to see how these trends play out further. Will house prices continue to rebound as they have been recently? Will household debt levels continue to increase? Only time will tell – but either way, understanding these trends is important for anyone considering buying or selling a home in the Virginia Beach metro area