Black Knight: Higher-Priced Homes Appreciating Faster Than Lower-Priced Ones

Posted by Patrick Barnard on January 12, 2015 No Comments
Categories : Residential Mortgage

Higher-priced homes are appreciating faster than lower-priced ones in most areas of the country, a report from Black Knight Financial Services shows.

More specifically, home price recovery for the lowest 20% of property values has lagged behind those at the top in the hardest-hit states, the firm's home price index (HPI) report reveals.

In addition, the firm's data shows that higher-priced homes depreciated more slowly after the recession and gained appreciation more quickly as the economy improved, in comparison to lower-priced homes.

‘We looked at home price appreciation from pre-crisis peaks to today in the 10 states currently trailing the furthest behind their pre-crisis housing maximums,’ explains Trey Barnes, senior vice president of loan data products for Black Knight, in a release. ‘The data showed a clear difference in the levels of recovery among home price tiers. The Black Knight HPI separates home values for every geographical division into five equal tiers; those in the lowest 20 percent of home values have been lagging behind their higher-valued counterparts in recovery to pre-crisis peaks, sometimes considerably.

‘For example, in Nevada – overall, still more than 39 percent off its pre-crisis peak – properties in the lowest tier are nearly 47 percent off their peaks, as compared to 36 percent for those in the highest tier,’ Barnes says. ‘In California, an even starker contrast emerges: properties in the highest tier have now come within just over 3 percent of their pre-crisis peak, while those in the lowest 20 percent are still almost 32 percent down. In many cases, these disparities between price tiers can be attributed to the fact that during the bubble, lower-tier properties appreciated at much higher rates than higher-valued properties and, likewise, fell harder and further when the bubble broke.’

Similar findings were recently revealed in a report from valuations technology firm FNC.

Meanwhile, Black Knight's data shows that more than 50% of the mortgage modifications completed in 2014 were under the government's Home Affordable Modification Program (HAMP). About 70% of those modifications were for Federal Housing Administration/Veterans Affairs (FHA/VA) loans, as compared to about 15% in 2013.

The report also finds that the average size of the payment reductions under HAMP has declined, due in no small part to lower unpaid balances on most FHA/VA loans.

In addition, redefault rates on 2014 HAMP loans are higher than on 2012 and 2013 loans. However, Black Knight says HAMP modifications continue to exhibit lower redefault rates than proprietary modifications across all vintages.

In its November Mortgage Monitor report, Black Knight also attempts to explain the 11.8% month-over-month spike in the national delinquency rate that occurred in December. It was the largest increase for any month since November 2008.

The firm says the size of the increase can be largely attributed to a reduced number of payment processing days for the month (given two federal holidays and the month ending on a Sunday) and points out that the five largest month-over-month increases in delinquencies of the past seven years have all occurred in months ending on Sundays.

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