Do tornadoes cause house prices to rise? That's what I wonder after reading the latest house-price index from FHFA, the agency that oversees Fannie Mae and Freddie Mac.
Joplin, Mo., had the highest rate of home value appreciation in the 12 months that ended March 31, according to the Federal Housing Finance Agency's House Price Index. Real estate values in Joplin increased 4.93 percent in one year.
I wonder if it's a coincidence that Joplin was struck 368 days ago by a monster tornado that destroyed 8,000 houses. Would that increase the values of houses that remained habitable? I assume so.
Next on the list were Cape Coral-Fort Myers, Fla., with a 4.85 percent increase, and Bend, Ore., at 4.67 percent. Both places busted badly during the real estate slump, with prices far below where they were in the first quarter of 2007. Next on the list are Bismarck, N.D., and Ames, Iowa.
FHFA prepares a bunch of house-price indexes, and the index headed up by Joplin measures the prices of houses that are sold (with mortgages securitized by Fannie and Freddie) as well as values of houses that are appraised for refinances.
I pay attention to FHFA's price indexes because they concentrate mostly on middle-class houses, like the one I own. FHFA's indexes largely exclude McMansions with jumbo mortgages and cheap houses with FHA-insured loans. By contrast, the Case-Shiller house-price indexes are weighted more toward expensive houses.
Looking at purchases only (excluding appraisals for refinances), the national price index was up 0.5 percent year-over-year, and was up 0.6 percent compared to the previous quarter. Prices were up 1.8 percent in March compared to February. Homebuying really heated up in March.
Of the 25 biggest metro areas, purchase prices were up the most in Warren-Troy-Farmington Hills, Mich., increasing 6.2 percent in a year. Edison-New Brunswick, N.J., recorded the biggest decline in purchase prices, falling 5.61 percent in one year.