CoreLogic’s latest Home Price Index (HPI) and HPI Forecast for April 2021 has found that nationally, home prices increased 13% year-over-year compared to April 2020. On a month-over-month basis, home prices increased by 2.1% compared to March 2021.
Scarce inventory and high demand continues to place upward pressure on home prices, creating challenges across generations, as buyer preferences shift. CoreLogic found that younger millennials continue to enter the market in droves, while older millennials look to upgrade and upsize their homes. In a recent CoreLogic consumer survey, the need for more space was noted as the top driver (64%) for demand among these cohorts.
Increased competition among homebuyers is causing affordability challenges for baby boomers interested in downsizing or relocating. Notably, 72% of this cohort list the desire for a new location as the main reason for wanting to purchase a new home. However, in response to rising prices, baby boomers—who currently own 54% of the nation’s homes—may wait to sell, forcing inventory numbers to further dry up.
“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,” said Frank Martell, President and CEO of CoreLogic. “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.”
CoreLogic found that prospective buyers continued to seek more spacious properties, as the appreciation of detached properties (14.7%) was more than double that of attached properties (7.2%) in April.
With demand driving down supply, home prices are projected to increase 2.8% by April 2022, as affordability and supply challenges force potential buyers out of the market, causing a slowdown in home price growth.
“Baby boomers are staying in their homes longer, slowing the pace with which existing homes come on the for-sale market,” said Dr. Frank Nothaft, Chief Economist at CoreLogic. “Owner occupants today have been in their homes for a median of 13 years, about 50% longer than the previous generation.”
Regionally, home prices in April rose sharply in the West, with Coeur d’Alene, Idaho, experiencing the highest year-over-year increase at 31.4%. Boise City, Idaho, ranked second with a year-over-year increase of 28.6%. At the state level, Idaho and Arizona continued to have the strongest price growth at 27.2% and 20.4%, respectively. South Dakota also had a 19.3% year-over-year increase, as new home buyers seek out more affordable options, spacious homes and low property taxes.