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Forecasting the Future of Home Values

Housing forecasts can be tricky, especially in the present market conditions where values change by the day. According to CoreLogic’s latest House Price Index (HPI) Validation Report released on Thursday, the company’s national HPI forecast for 2017 came within 1.7 percent of the actual increase in HPI over a 12-month period ending in November 2017.

The annual report publicly compares its 12-month HPI Forecasts to the actual CoreLogic HPI Index, along with changes in national and key Core Based Statistical Area (CBSA) level forecasts made in November 2017 to the actual HPI index released in February 2018. The report includes data through November 2017.

According to the report the national prediction forecast of 4.5 percent increase was within 1.7 percent of the 6.2 percent increase of HPI. The CBSA covering Washington-Arlington-Alexandria had the most accurate CBSA-level results with the forecast coming within 0.1 percent of its actual values and five other CBSAs coming within 0.5 percent of their actual values.

The St. Louis CBSA straddling Montana and Illinois was the second most accurately predicted area with its 12-month actual HPI change at 3.8 percent against the forecasted rate of 3.6 percent.

The Cincinnati area straddling Ohio-Kentucky-Indiana came in third in terms of accurately predicted HPI forecasts followed by Baltimore-Columbia-Towson, Maryland; Indianapolis-Carmel-Anderson, Indiana; Los Angeles-Long Beach-Glendale, California; Phoenix-Mesa-Scottsdale, Arizona; Pittsburgh, Pennsylvania; Cleveland-Elyria, Ohio; and Miami-Miami Beach-Kendall, Florida.

According to the report, Miami was the most overvalued housing market (63.9 percent overvalued), followed by Cape Coral-Fort Myers (55.7 percent), and Austin-Round Rock (51.9 percent). At 32.4 percent under its actual value, the Bridgeport-Stamford-Norwalk housing market remained the most undervalued market in the U.S. followed by Detroit (30.7 percent) and Cleveland (26.1 percent).

The report also indicated that 50 percent of the metro areas under consideration for Amazon HQ2 are already overvalued.

“[Our] insight into the potential Amazon HQ2 locations shows that all the markets being considered are currently experiencing home price growth, which we can expect to accelerate in the city that is eventually selected.”

The report said that Pittsburgh, Indianapolis, Boston, Philadelphia, Newark, and Atlanta had the ideal housing conditions to support the expected population influx from Amazon’s HQ2. Austin, Dallas, Denver, Los Angeles, Miami, Nashville, New York, and Washington were already overvalued markets which could represent additional housing challenges should HQ2 be built in these cities, the report said.

To view the full report, click here.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at [email protected].

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