A new report has found that the explosive growth rate in housing prices has reached historic levels, with a year-over-year gain of 18% in July coming in as the highest 12-month increase since that data index was created in 1976.
After extremely limited supply and superheated demand fueled these increases, the recent report by analytics company CoreLogic anticipated significantly slower growth over the next year, projecting 2.7% growth in home prices between July of 2021 and July of 2022.
“July’s annual home price growth was the most that we have ever seen in the 45-year history of the CoreLogic Home Price Index,” said Frank Nothaft, CoreLogic chief economist, in a statement. “This price gain has far exceeded income growth and eroded affordability. In the coming months, this will temper demand and lead to a slowing in price growth.”
The takeaway:
A continued lack of housing supply, particularly affordable stock, will severely limit home-price appreciation, according to the report, as prices outstrip incomes. Right now, though, prices are still rising at a rapid rate, jumping 1.8% between June and July of this year—though the report predicts a more modest increase of 0.7% month-to-month growth in the coming year.
“Home-price appreciation continues to escalate as millennials enter their prime home-buying years, renters look to escape skyrocketing rents and deep-pocketed investors drive demand,” said CoreLogic CEO Frank Martell in a statement.
Single-family homes saw nearly double the appreciation of condos or other attached properties, though at an 11.6% increase, condos still saw their largest single year jump since 2006.
The report also delineated price growth relative to the median home sales price, and found lower-priced houses saw significantly more accelerated growth than higher-priced homes. The lowest priced homes grew by 22.1%, while the highest tier grew 19.1%.
Where and when:
Here are the top five states and top five cities for home-price appreciation, according to the report.
States:
– Idaho at 33.6%
– Arizona at 28.4%
– Utah at 25.7%
– Montana at 23.5%
– Nevada at 22.4%
Cities:
– Phoenix, Ariz. at 29.7%
– San Diego, Calif. at 23.7%
– Las Vegas, Nev. at 21.1%
– Denver, Colo. at 19.3%
– Los Angeles, Calif. at 14.6%
The report also highlighted five metro areas most at risk of seeing a price decline over the next year, all with a 25-50% chance of depreciation. Those cities are:
– Springfield, Mass.
– Chico, Calif.
– Merced, Calif.
– Norwich-New London, Conn.
– Beaumont-Port Arthur, Texas
Read the full report here.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.
