At the end of Q4, home price values nationally were up year-over-year for the fifth consecutive month, according to the latest CoreLogic Home Price Index and HPI Forecast report.
The report found that in December 2017, home prices in the United States were half a percent higher in December than in November and an average 6.6 percent higher than in December 2016. Higher growth rates occurred in the West, namely in California, Idaho, Nevada, Utah, and Washington.
Moreover, CoreLogic reported, home price values are expected to be another 4.3 percent higher this coming December than they were at the end of 2017. CoreLogic expects monthly values this year to be about half a percent higher than their corresponding 2017 months were.
Part of the reason home values are on such an upswing is the lingering shortage of houses available on the market, and part is a still-robust economy.
“The number of homes for sale has remained very low,” said Dr. Frank Nothaft, Chief Economist for CoreLogic. “Job growth lowered the unemployment rate to 4.1 percent by year’s end, the lowest level in 17 years. Rising income and consumer confidence has increased the number of prospective homebuyers. The net result of rising demand and limited for-sale inventory is a continued appreciation in home prices.”
Frank Martell, President and CEO of CoreLogic, credited the price growth to “aggressive monetary policy, the economic and jobs recovery, and a lack of housing stock.”
This, Martell said, is making it tough for less affluent buyers to find homes to invest in.
“As home prices and the cost of originating loans rise, affordability continues to erode, making it more challenging for both first-time buyers and moderate-income families to buy. At this point, we estimate that more than one-third of the 100 largest metropolitan areas are overvalued.”
According to CoreLogic, 35 percent of the top 100 metropolitan areas had an overvalued housing market as of December. Almost half the top 50 markets were overvalued. Conversely, 28 percent of the top 100 metros and 14 percent of the top 50 metros were undervalued. Thirty-seven percent were where they should be.