On an annual basis in December, home prices rose 4 percent, according to CoreLogic’s latest Home Price Index (HPI™) report. By December 2020, CoreLogic expects home prices to rise 5.2 percent.
Thirty-four 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 26 percent are undervalued (“at least 10 percent below the long-term, sustainable” trend). Across the 50 largest markets, 40 percent are overvalued; 40 percent are at-value and 20 percent are undervalued.
“On a national level, home prices are on an upswing,” Frank Martell, president and CEO of CoreLogic, says. “Price growth is likely to accelerate in 2020.”
Affordable homes remain scarce, and demand is moving prices up, even higher than the national trend, according to Frank Nothaft, chief economist at CoreLogic.
“Moderately priced homes are in high demand and short supply, pushing up values and eroding affordability for first-time buyers,” Nothaft says. “Homes that sold for 25 percent or more below the local median price experienced a 5.9 percent price gain in 2019, compared with a 3.7 percent gain for homes that sold for 25 percent or more above the median.”
In additional CoreLogic findings, there appeared to be a connection between 30-something millennials and owning. Seventy-nine percent of age 21-29 millennials aspire to homeownership, according to the CoreLogic study, but are not actively looking; however, among 30-and-older millennials, homeownership rates rose, indicating that the milestone potentially prompts purchases.
Regardless of age or readiness, millennials are contending with financial hurdles, which could grow worse, especially if prices rise unsustainably.
“While demand for homeownership has continued to increase for millennials, particularly those in their 30s, 74 percent admit they have had to make significant financial sacrifices to afford a home,” Martell says. “This could become an even bigger factor as home prices reach new heights during 2020.”
For more information, please visit www.corelogic.com.
