Home price growth is slowing down and that could spell good news for buyers who were previously priced out of the market. According to CoreLogic's latest Home Price Index (HPI) and HPI Forecast for December 2018, though home prices increased by 4.7 percent year-over-year, they're projected to grow at a slightly lower rate of 4.6 percent year-over-year through December 2019.
Comparing the annual average HPI and HPI forecast for 2018 and 2019, price growth is forecasted to slow from 5.8 percent to 3.4 percent, the report indicated. Prices are expected to decrease by 1 percent on a month-over-month basis between December 2018 and January 2019.
Looking at the housing values in the nation's 100 largest metropolitan areas based on the housing stock available, the report noted that 33 percent of metropolitan areas had an overvalued market in December 2018. However, looking at the top 50 markets, 40 percent of homes were overvalued, 18 percent were undervalued and 42 percent were at value.
Higher mortgage rates not only slowed price growth but home sales also in the second half of 2018, according to Dr. Frank Nothaft, Chief Economist, CoreLogic. “Annual price growth peaked in March and averaged 6.4 percent during the first six months of the year. In the second half of 2018, growth moderated to 5.2 percent. For 2019, we are forecasting an average annual price growth of 3.4 percent,” he said.
However, these trends are likely to good news for potential homeowners. In 2018, CoreLogic together with RTi Research of Norwalk, Connecticut, conducted a survey measuring consumer-housing sentiment, assessing attitudes toward homeownership and the driving force behind the decision to buy or rent a home.
According to this survey when renters were asked how interested they were in owning a home or residence, 36 percent felt homeownership would allow them to fulfill a dream and provide a place to raise a family. On the other hand, 45 percent of those surveyed claimed they could not afford to buy or take on the responsibility of ownership at this time.
However, the latest HPI report indicated that as home-price growth cooled and incomes rose, buyer affordability was likely to improve and help "home sales to pick up."
“The slowdown in the rate of home price appreciation reflects the impact of inventory shortages and growing affordability issues in many markets,” said Frank Martell, President and CEO of CoreLogic. “On the positive side, if home-price growth continues to moderate, interest rates remain stable, and household incomes rise in 2019, it could help renters and first-time buyers to take the plunge and realize the dream of owning a home.”
Las Vegas led the metropolitan areas that saw the highest year-over-year change in HPI at 11.3 percent, followed by Denver at 5.6 percent, Miami at 4.7 percent, Los Angeles (4.5 percent), and Houston (4.1 percent).