November 6, 2019

C-Suite, Loan Officer, Origination, Secondary Market, Servicing, Home Price Index HPI

7.9% Year-Over-Year Increase in Median Prices According to the New Radian Home Price Index

In data released in September 2019, the Radian Home Price Index (HPI) showed a 7.9 percent year-over-year increase in median values. This follows a 5.8 percent annualized growth rate in the second quarter of 2019. In fact, according to a new historical HPI announced by Radian Group Inc. (NYSE: RDN) home price appreciation has accelerated across the United States.

Steve Gaenzler, Senior Vice President of Data and Analytics said, “Stronger year-over-year home price appreciation was driven by lower interest rates, lack of supply and a solid economy. Year-over-year gains in appreciation had slowed throughout much of 2018 and the first months of 2019, but the Radian Home Price Index tells a different story now. All indications are that low interest rates in particular have re-heated an already hot real estate market.”

The Radian HPI reviews six tracking regions across the U.S. and in September prices in all six regions had increased from the previous reading. In addition, Radian HPI detected a shift in regional strength. While the West region recorded the strongest annual price gains from July 2016 through July 2019, over the course of summer 2019, the West dropped from first to fourth place, behind the Midwest, South, and Southwest. While continuing to grow, the Northeast and Mid-Atlantic regions have shown comparatively slower rates of appreciation.

Existing First Time Homeowners Hold Win-Win Options

After years of positive home price appreciation, many existing first-time homeowners are trying to determine whether they should sell and buy their next home or to tap into their home equity to expand their current residence.

The September 2019 Radian HPI evaluated three-digit zip code areas in the U.S. in order to identify those markets where renovating to expand a two-bedroom starter home may be a better housing option than selling and purchasing a larger home. Targeting U.S. markets where the five-year growth in home prices has eclipsed 35 percent, 10-year growth exceeded 50 percent, and where the minimum average gain was more than $50,000 over the last five years, Radian HPI evaluated the gaps in current prices between two-bedroom starter homes and the next “forever” home.

Of the eligible markets in the Radian HPI, home prices between the starter home and forever homes in four states showed the greatest opportunity in favor of renovations: Texas, Florida, Colorado, and California. Areas where equity build-up was enough to support cashing out without expanding loan-to- value ratios, and where the market price of the next larger house was more than the cost of the renovation are considered the best for a face lift.

  • Homes in the 334 zip code, an area along the southeastern coast of Florida and including cities from Deerfield Beach to Jupiter, are a prime example. That zip code recorded a 10-year gain in two-bedroom property value of more than $80,000, well more than enough to cover the cost of an average addition, which is a little more than $45,000 depending upon location, type of addition, and finishes. In this area, the inferred increase in value created through an addition is more than $119,000, based on the current value of three-bedroom homes in the area.
  • Not surprisingly, some metro areas registered more than one three-digit zip code at the top end of the list. These included areas around Dallas, TX (3); Denver, CO (2); Fresno, CA (2); Melbourne, FL (2); Miami, FL (3); Orlando, FL (2) and Phoenix, AZ (2).
  • In addition to the larger metros, Radian HPI found a number of opportunities in midsized cities around Manchester, NH; Detroit, MI; Sioux City, IA; Burlington, VT and Kansas City, KS. These areas have also experienced strong home price increases, but still retain the value proposition of renovation relative to selling and buying a three-bedroom home.

For homes with large equity increases but where the price jump between two- and three-bedroom homes remains narrower, combined with near record low interest rates, it may make more economic sense to take the cash from a sale and invest in a larger home.

Regardless of the individual situation, the strong growth in home equity has created some win-win decisions for existing first-time homeowners looking to expand their living area. For more information about Radian HPI, visit

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