According to the latest CoreLogic Home Price Index report released on Tuesday, home prices increased 13 percent year over year and 2.1 percent monthly in April. This number is the highest it’s been since February 2006 and marks the third month in a row that home prices have seen double-digit annual increases.
Such high appreciation comes amid record-low mortgage rates coupled with a nationwide inventory shortage. Although great for homeowners, the current situation is making it extremely difficult for first-time and young buyers without family help to break into the market.
“As older homeowners become more comfortable with listing their homes, they are faced with the reality that if they sell, they may get a smaller home for the same price as what they already have,” Frank Martell, president and CEO of CoreLogic, said in a prepared statement.
“Rather than decreasing their financial burden and cashing out equity to support their retirement, baby boomers may choose to stay put — which could exacerbate inventory challenges.”
Detached properties increased in price even more than attached properties — 14.7 versus 7.2 percent, respectively. The report also found that 72 percent of baby boomers (who currently own 54 percent of the nation’s homes) who have recently sold a home did so out of a desire for a new location.
According to CoreLogic’s predictions, home values will grow by 2.8 percent by April 2022. That number, while still on the increase, will be lower than this year’s growth in large part due to the slowing of the market that is caused by widespread inaccessibility on one end and owners who choose to hold on to their properties in the hopes of even more growth on the other.
“Baby boomers are staying in their homes longer, slowing the pace with which existing homes come on the for-sale market,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a statement. “Owner occupants today have been in their homes for a median of 13 years, about 50% longer than the previous generation.”