The latest CoreLogic HPI has just been released, and it is revealing just how much an impact the current pandemic has had on the housing market trends. The initial onslaught of the pandemic arrived fast on the heels of the longest, steady periods of economic growth in America. Unsurprisingly, the economy immediately began to decline and a recession ensued.
However, this recession we find ourselves within (four months in and running), is bucking the usual trends regarding how it affects the housing market. Typically, home prices fall. But we are seeing home prices grow—a trend which, according to data gleaned from the CoreLogic HPI forecast [1], experts believe will continue well through the first quarter of 2021.
These statistics and predictions are, of course, targeted for home price trends on a national scale, across the board on average. Time and again, we have seen that national trends don’t always reflect exactly what is occurring on a smaller scale within some local markets. For this reason, it is not surprising to see that in many places across the U.S., home prices can and will fall, even when the nation’s HPI is rising.
For example, as price tags for American residents have continued to consistently climb in 2020, data does reveal that there are a number of metro areas in the nation that report home price declines from their tag costs just one year prior. The specific percentage of these metro areas where this buck in the trend occurred was a whopping 14% in May, marking the highest rate of home price declines since that start of 2013. In light of this, experts expect our current recession will cause more and more housing markets where home prices are subject to falling to crop up.
Based on data gleaned from the May 2020 CoreLogic Market Risk Indicators—a study that helps predict the probability of a home price decline over a 12-month period for 392 metro areas— there was a range of probabilities predicted based on locale for lowering prices through June 2021. Specifically, percentages ranged from 19% (St. Joseph, Missouri) to an incredible 98% (Kahului, Hawaii). These predictions were based upon criteria including unemployment rates, income, distressed loans, and new construction, among others.
Botton line: CoreLogic predicts that nearly one-third (29%) of the 392 metro regions studied have a 65% or greater probability of price decline during the next year.