In August, home prices rose 3.6 percent year-over-year, climbing 0.4 percent from July, according to CoreLogic’s latest Home Price Index (HPI™) report. By August 2020, CoreLogic expects home prices to rise 5.8 percent, the report shows.
Thirty-seven percent of the 100 largest markets are overvalued, a condition CoreLogic defines as when “home prices are at least 10 percent higher than the long-term, sustainable” trend, according to the HPI report; 40 percent are at-value; and 23 percent are undervalued (“at least 10 percent below the long-term, sustainable” trend). Across the 50 largest markets, 40 percent are overvalued; 44 percent are at-value and 16 percent are undervalued.
“The 3.6 percent increase in annual home price growth this August marked a big slowdown from a year earlier when the U.S. index was up 5.5 percent,” says Dr. Frank Nothaft, chief economist at CoreLogic. “While the slowdown in appreciation occurred across the country at all price points, it was most pronounced at the lower end of the market. Prices for the lowest-priced homes increased by 5.5 percent, compared with August 2018, when prices increased by 8.4 percent. This moderation in home-price growth should be welcome news to entry-level buyers.”
According to an additional CoreLogic and RTi Research study, the majority of millennial renters (75 percent) believe they’ll buy a home, but when it comes to their current living situation, millennials aged 30-38 expressed a preference for a detached house in the suburbs, while millennials aged 21-29 favored a rental in the city. Still, 79 percent of millennials aged 21-29 believe they’ll buy a home.
“The millennial cohort has now entered the housing market in force and is already driving major changes in buying and selling patterns,” says Frank Martell, president and CEO of CoreLogic. “Almost half of the millennials over 30 years old have bought a house in the last three years. These folks are increasingly looking to move out of urban centers in favor of the suburbs, which offers more privacy and a greener environment. Perhaps most significantly, almost 80 percent of all millennials are confident they will become homeowners in the future.”