(The Center Square) – Home prices are at their highest level in 45 years, excluding many buyers from a historic sellers market, new The data published by the CoreLogic show.
Annual home prices were 18% higher in October this year than last October, and were also the highest recorded in the 45-year history of a home price index released by the global real estate company.
“The formation of new households, investor purchases and the pandemic-related factors driving demand for the limited supply of available-for-sale housing continue to propel the upward spiral in home prices in the United States.” , said Frank Martell, president and CEO of CoreLogic, in a statement accompanying the report’s findings. “However, we expect home price growth to moderate in the near term as many buyers take a break for the holidays.”
Single-family homes were the preferred choice of buyers during this period, with the appreciation of detached properties being 6.6% higher than that of semi-detached properties.
Arizona, Idaho and Utah saw the largest increases in home prices from October 2020 to October 2021, over 24%.
Arizona homes saw the largest increases in a year of 28.8%; Idaho homes sold 28.7% more; Utah homes for 24.5% more.
Single-family home prices increased the most in Twin Falls, Idaho, with the largest year-over-year increase of 35.8%, according to the report.
For the first time in 2021, Florida topped the list in home price increases, with homes in Naples selling 33.5% more than the year before.
Despite the housing market’s record-breaking affordability, millennials have applied for more mortgages than any other generation, CoreLogic found, with the majority of mortgage applications between the ages of 26 and 41.
As house prices rose in many parts of the country, indicators of the state of the home market in some parts of the country are overvalued, the report notes. With higher demand and lower supply, bidding wars and cash buyers, homes are selling for more than they are worth. Overvalued homes are mostly found in Denver-Aurora-Lakewood area of Colorado, Houston-Woodlands-Sugarland area of Texas, Las Vegas-Henderson-Paradise area of Nevada, Miami-Miami Beach-Kendall area in Florida, the Phoenix- the Mesa-Scottsdale area in Arizona and the Washington-Arlington-Alexandria area in Virginia.
In contrast, not all markets are sellers’ markets, the report adds.
The main markets at risk of falling home prices are in Worcester and Springfield, Massachusetts, Modesto and Merced, Calif., And Kalamazoo-Portage, Michigan, according to CoreLogic.
Overall, recent forecasts for next year’s housing market by Fannie Mae and Zillow indicate that it will be another sellers’ market.
Fannie Mae’s November forecast projects the median used home price to exceed $ 400,000 by the middle of 2023. He also predicts the median new home price to hit $ 464,000 by the next. end of 2024, or about $ 100,000 more than the median new home price. the price was in January 2021.
Zillow is recent provide predicts house prices will rise more than 13% from October 2021 to October 2022. He also expects federal monetary policy to tighten due to high inflation.
“High inflation increases the risk of a tightening of monetary policy in the short term, which would cause mortgage rates to rise and put pressure on housing demand,” Zillow reports.
Anticipating further Federal Reserve action, Fannie Mae also revised his 30-year mortgage rate forecast from 3.1% to 3.3% for 2022.
While these forecasts do not bode well for buyers, there is a silver lining. Prices will not stay at record highs and a market correction is ultimately expected.
The Mortgage Bankers Association predicts that home prices will begin to decline in the second half of 2022.
Likewise, CoreLogic expects home price gains to slow to an annual increase of 2.5% by October 2022, as affordability and economic concerns deter some potential buyers. He also expects more homes to be available for sale.
By Bethany Blankley | The Center Square contributor