Frequently Asked Questions

As the area for which you forecast gets smaller, the reliability of the forecast gets weaker. At the zip code level, our goal is to show if a zip code area is likely to be superior or inferior over the next few years.

At the zip code level, there is also no way to reliably measure actual annual results. The data from the Census are multi-year averages.

The county forecasts depend on the forecast for the MSA they are in, modified by differences in population growth and job growth.

The zip forecasts depend on the forecast for the county they are in, modified by differences in population growth. (No job data are available.)

What influences our forecast the most are the actual change in prices in the past year, and the current rate of local job growth.

We forecast for individual years and also cumulatively. Because of the uncertainty of all home price data, the cumulative forecast is best for identifying Strong and Weak markets.

Unlike stocks for example, the price of homes doesn’t vary sharply from year to year. So a Strong market is likely to remain Strong for several years – demand will exceed supply. And vice versa for a Weak market.

You would have a better chance of making a good investment (in a home, a mortgage, or a rental property) in a Strong market. Good investments can also be made in a Weak market, but the risk is much higher.

Implicitly we do in our general forecast of demand, which we set lower in markets with lots of vacant units (recently in Florida markets).

Otherwise we don’t because there is no reliable estimate of inventory for our 320 markets (the Census data are always at least a year old).

1. The most recent home price data.
2. The most recent – and our forecast of – job growth.
3. Our general forecast of demand for homes.
4. The price volatility of individual markets.
5. Price cycle dynamics, including the Income Price.

The Local Market Monitor – Business Growth Report – was developed to provide branch managers and business bankers much needed information about which industries in their market area are growing the fastest so that they can focus their sales efforts on the hottest prospects. Using data from the Bureau of Labor Statistics, Local Market Monitor has identified each industry in a specific market area using NAICS codes, ranked the industries according to payroll growth and outlined which banking products companies in each industry should be using. Updated quarterly and downloadable through Excel – this report should be used by every banker looking to focus their sales efforts on the best opportunities.

The fact that a market is over or under-priced doesn’t automatically tell us if home prices will go up or down, just whether there is more or less risk. Home prices in many Florida and California markets increased for years even though the markets were already severely over-priced.

FHFA does not publish actual price data for markets, just the index numbers. We determine the actual average home prices for the markets we cover by analysis of raw HMDA data [all mortgage originators are required to submit data on all mortgage applications; we extract sales information from those applications that resulted in home purchases.] For some markets, we use home price information collected by the Census.

Each market report shows the actual and forecasted results for each quarter from Q1-2005 to present. The reports of historical accuracy use the initial forecast published. The revisions in the two following months are usually very minor unless there are dramatic changes in the job situation in a local market, and even then they’re not large.

We forecast home price changes one, two and three years into the future.

The US Census Bureau outlines what cities are covered under each MSA: https://www.census.gov/programs-surveys/metro-micro/geographies/geographic-reference-files.html

The price range is back-calculated from the actual number of renters in each zip code at different rents. The top and bottom of the range are where the number of renters quickly decreases. In some zip codes the range includes about half of all renters, in some up to three quarters.