Last week, in our 30-second update we discussed the facts about a housing bubble. This week, we’ll take a look at CoreLogic’s Home Price Index report which points to even more continued strength in the housing market.
Home prices nationwide, including distressed sales, increased year over year by 20% from February 2021 to February of this year. On a month-over-month basis, home prices increased by 2.2% in February 2022 when compared with January 2022. This also marks a 12-month run of consecutive double-digit gains for home prices. The culprit of this is simple to identify; prospective home buyers outnumber available homes for sale, which are now at a record low.
CoreLogic forecasts that home prices will increase by 0.6% from February to March and by 5.0% from February of this year to February of next year. But when looking at their track record they forecasted around a mere 3% appreciation last year when the report just reviewed was at 20%.
On the flip side, and speaking about forecasts, CoreLogic is estimating that there might be certain markets that are at risk for home price declines. The CoreLogic Market Risk Indicator, which is a monthly report on the overall health of housing markets across the country, predicts that Lake Havasu-Kingman, Arizona is at a high risk (50% – 70% probability) of a decline in home prices over the next 12 months. Also, in that category is Prescott, Arizona (50% – 70%). However, Bridgeport-Stamford-Norwalk, Connecticut; Hartford, Connecticut; and Urban Honolulu, Hawaii are at moderate risk (25% – 50%) of a decline.
While a decline in home prices is a little worrisome, again the CoreLogic HPI Forecast has not been the most accurate resource. Others like Zillow are forecasting double-digit appreciation levels over the next year and other resources and economists are forecasting higher levels of appreciation than CoreLogic is estimating as well.
What this all boils down to is that the market is still very healthy in the face of higher interest rates. Tight inventory and record levels of demand are very supportive of home pricing.