Home prices have been climbing back toward pre-recession peaks now for years—in fact, the September S&P CoreLogic Case-Shiller Home Price Indices reported that home prices had increased over-the-year for 53 months in a row and had clawed their way back up to within 20 percent below pre-recession peaks when accounting for inflation.
October marked a 54th month in a row for home price appreciation. For the month, including distressed sales, home prices jumped by 6.7 percent over-the-year and are projected to grow by another 4.6 percent by October 2017, according to CoreLogic’s Home Price Index (HPI) for October 2016.
“Home prices are continuing to soar across much of the U.S. led by major metro areas such as Boston, Los Angeles, Miami and Denver. Prices are being fueled by a potent cocktail of high demand, low inventories, and historically low interest rates,” said Anand Nallathambi, president and CEO of CoreLogic. “Looking forward to next year, nationwide home prices are expected to climb another 5 percent in many parts of the country to levels approaching the pre-recession peak.”
Dr. Richard K. Green, Director of the USC Lusk Center for Real Estate, told MReport that ongoing home price appreciation has resulted in more equity for homeowners, but at the same time, “While it’s certainly positive that more people own homes worth more than their mortgage balances, the recovery in house prices has been uneven and prices remain well below their peaks in many parts of the United States,” he said.
Markets such as Miami, Tampa, Phoenix, and Las Vegas experienced the highest rate of home price appreciation among metros in September, but are still well below their pre-recession peaks, according to September’s Case-Shiller Index.
For October, home prices increased by 5.8 percent over-the-year in Las Vegas, one of the areas hardest hit by the crisis, and are forecasted to rise by another 8.5 percent by next October. The market with the highest appreciation rate in October was Denver, at 9.4 percent; the market with the highest forecasted rate of appreciation for the coming year was San Francisco at 10.2 percent.
“While national home prices increased 6.7 percent, only nine states had home price growth at the same rate of growth or higher than the national average because the largest states, such as Texas (6.7 percent), Florida (7.8 percent), and California (5.5 percent), are experiencing high rates of home price appreciation,” said Dr. Frank Nothaft, chief economist for CoreLogic.
CoreLogic reported in the October HPI that 109 markets are overvalued, meaning they have a current HPI of 10 percent or more higher than the long-term fundamental value for that market. According to CoreLogic, 17 of those overvalued markets were located in Texas.
Click here to view the October CoreLogic HPI.