Estimating Median House Prices

Nondisclosure laws and other factors have hindered the production and release of median home price in many areas across the country. This paper attempts to fill the gaps and develops a simple approach to estimating median prices for a geographically complete set of areas. The methodology begins by aggregating mortgage-level data from Fannie Mae, Freddie Mac, the Federal Housing Administration, and First American CoreLogic. Redundant observations are removed from the aggregate data and median home prices are calculated from the resulting dataset. Using county recorder data obtained for several hundred counties across the United States, the methodology then estimates the relationship between the calculated median prices and medians determined from the recorder data. The paper illustrates how this relationship can then be used to extrapolate median home values for areas for which recorder data are unavailable. Because one potential application of this approach would be to support the setting of conforming loan limits in high-cost areas, which are calculated as a function of median prices, actual 2009 high-cost-area conforming loan limits are then compared to the loan limits that would have been in effect had the approach been used to set the limits. The paper also briefly discusses the application of the basic methodology to estimating a national average home price, a statistic important for the setting of the national conforming loan limit