CoreLogic today released its Home Price Index (HPI) and HPI Forecast data for January 2018, which boasted 6.6 percent year-over-year growth. January is the sixth consecutive month with year-over-year increases measuring more than 6 percent. Gains were modest month-over-month at 0.5 percent.
CoreLogic chief economist Dr. Frank Nothaft says starter homes continue to be in short supply, and buyers will struggle to find affordable options in that tier. “Entry-level homes have been in particularly short supply, leading to more rapid home-price growth compared with more expensive homes,” said Nothaft in a statement. “Homes with a purchase price less than 75 percent of the local area median had price growth of 9.0 percent during the year ending January 2018.”
“Homes that sold for more than 125 percent of median appreciated 5.3 percent over the same 12-month period. Thus, first-time buyers are facing acute affordability challenges in some high-cost areas.”
Looking ahead, home prices are expected to increase by 4.8 percent year-over-year by January 2019. California, Florida, Nevada and Oregon are expected to see an even bigger increase at 7 percent.
According to CoreLogic’s Market Condition Indicators (MCI) data, 34 percent of the nation’s 100 largest metropolitan areas have overvalued housing stock. Another 27 percent were undervalued, and 39 percent are at value.
The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income, explains CoreLogic.
Las Vegas was the most overvalued market with an 11.7 percent year-over-year increase in single-family home prices. Denver, Los Angeles, New York City, Houston, Miami and Washington, D.C. were also overvalued with home price growth ranging from 3.0 to 8.4 percent year-over-year.
San Francisco, Boston and Chicago were at value, with home price growth ranging from 3.8 to 10.2 percent year-over-year.
CoreLogic president and CEO Frank Martell says affordability will continue to erode as home prices and mortgage rates rise, and is expected to disproportionately impact millennial first-time buyers.
“Millennials who are looking to become first-time homeowners find it particularly challenging to find an affordable home in these areas,” he said.
“Our projections continue to show tightness in the entry-level market for the foreseeable future, which could further prevent millennials from purchasing homes in 2018 and 2019, even as much of that generation reaches its prime home-buying years.”
About the CoreLogic HPI
The CoreLogic HPI is built on industry-leading public record, servicing and securities real-estate databases and incorporates more than 40 years of repeat-sales transactions for analyzing home price trends.
Generally released on the first Tuesday of each month with an average five-week lag, the CoreLogic HPI is designed to provide an early indication of home price trends by market segment and for the “Single-Family Combined” tier representing the most comprehensive set of properties, including all sales for single-family attached and single-family detached properties.