House Price Index at February 2004 Level

The FHFA, Federal Housing Finance Agency, publishes home price index numbers each month. They are delayed more than 30 days while the data is accumulated, so in April they report February numbers. The report just released indicates that the aggregated index number for the U.S. is at roughly the same level as it was in February 2004.
February’s index number is 18.6% below its April 2007 peak.
The FHFA Index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac. These are same house resale numbers, so when the same home sells again, the prices of those two sales are compared for inclusion in the index. This gives a reliable track of home prices, as two or more prices for the same home have the same product, so the prices should reflect mostly market variables.
What Does This Mean for Investors?
Prices continue to fall, and that’s always good news for real estate investors who want to add to their rental portfolios. Homes in several areas of the country that were previously not available at prices that would generate positive rental cash flows are now doing just that for enterprising investors.
For those in the more short term mindset, investors are still profiting from flipping homes as well. They are taking advantage of extremely low prices for foreclosure homes, rehabbing them, and selling them to long term investors or to consumers. Bird dog strategies are also flourishing in this market, as there are so many foreclosure and short sale opportunities that investors value their bird dog suppliers who can locate and sort through the deals to deliver the best opportunities.