Wilmington, DE-MD-NJ (MSAD) Federal Housing Finance Agency Home Price Index (FHFA HPI)

The Wilmington, DE-MD-NJ Federal Housing Finance Agency (FHFA) house price index (HPI) is a weighted, repeat-sales index measuring average price changes in single-family houses with mortgages backed by Fannie Mae or Freddie Mac. The HPI covers the nine county metropolitan statistical area (MSA) of Wilmington, which includes Cecil, Kent, New Castle, and Sussex counties in Delaware; Caroline, Dorchester, Kent, Queen Anne's, and Talbot counties in Maryland; and Salem and Cumberland counties in New Jersey.

Between 2000 and 2006, home prices in the Wilmington MSA increased rapidly. The HPI rose from 100 in 2000 to a peak of 168.6 in early 2006, an increase of 68.6%. However, since 2006 prices have fallen sharply. By the end of 2011 the HPI had declined to 134.3, a decline of 20% from its peak. In 2012 prices continued to fall reaching 131.7 by December 2012 before beginning to rebound modestly in 2013. As of September 2014 the HPI stood at 136.1

There are several reasons why home prices fell so sharply after peaking in 2006. First, the subprime mortgage crisis led to defaults and foreclosures on a large number of homes purchased with subprime loans during the housing boom years 2004 – 2006 . This increase in foreclosures put downward pressure on prices as more homes came onto the market for sale than there were buyers willing or able to purchase them . Second , job losses during the Great Recession that began in December 2007 led many homeowners into foreclosure as they could no longer afford their mortgage payments . Third , falling home prices made it difficult for many homeowners who wanted or needed to sell their homes to do so because they owed more on their mortgage than their home was worth – a condition known as being “underwater” on one’s mortgage . Lastly , stricter lending standards that went into effect after the housing market crash made it harder for potential buyers who did not have perfect credit or a large down payment saved up to obtain a loan to purchase a home .

The combination of these factors resulted in sharp declines in both home sales volume and average selling price across much of the country from late 2007 through early 2009 . In fact , nationwide sales volume fell by nearly 50% between 2005 and 2008 while average selling prices declined by over 20% . The Wilmington MSA was not immune from these trends as can be seen clearly in Figure 1 which shows both median sales price and number of sales for single family homes within the MSA from 2000 – 2014 . After rising rapidly during 2003 – 2005 , both measures peaked early 2006 before beginning sharp declines that lasted until early 2009 when they hit bottom . Prices then remained relatively flat until beginning another modest decline starting around mid-2011 that has continued through 2014 while sales have remained relatively flat since hitting bottom early 2009