Consumers Feel the Pinch of Rising Home Prices and Rents: CoreLogic Report
HOUSTON – (By Dale King, Realty News Report) – Prices of homes continue to rise throughout the U.S., but at a slower rate than in past years, says the March 2019 Home Price Report drafted by CoreLogic, a global property information, analytics and data-enabled solutions provider.
That’s not terrific news for potential homeowners. But it’s really bad for renters who feel the price hikes are keeping them out of the home-buying market.
The CoreLogic Home Price Index (HPI) and HPI Forecast for March 2019 show home prices rose both year-over-year and month-over-month. Home prices rose nationally by 3.7% year-over-year from March 2018 to March 2019. On a month-over-month basis, prices increased by just 1% in March 2019 from February 2019.
The report’s statistics for the Houston market, including Houston, the Woodlands and Sugar Land, show that home prices rose 3.5% year-over-year from March 2018 to March 2019. The year-over-year percentage for the State of Texas was 3.4%.
Prices roared in the Las Vegas area, soaring 8 percent in the previous 12 months, but the report dubs this area “overvalued.” That same adjective was applied in the survey to the Denver area (4.1%); the Houston range; Miami-Kendall expanse and Washington, D.C. region, both at 3%.
Only the year-over-year price growth for the Boston, Los Angeles and Chicago areas was considered “normal.” Those figures were in the low to high 2% range.
The document says price hikes in the housing market are preventing renters from crossing over into the home-buying arena.
During the first quarter of 2019, CoreLogic, together with RTi Research of Norwalk, Conn., conducted a survey measuring consumer-housing sentiment in high-priced markets. Survey respondents indicated high home prices have an impact on high rental prices as well. Nearly 76% of renters and buyers in high-priced markets agreed housing prices in these locations appeared to be driving rental rates up, jacking up their rent and, in turn, preventing them from being able to afford a home.
“The cost of either buying or renting in expensive markets puts a significant strain on most consumers,” said Frank Martell, president and CEO of CoreLogic. “Nearly half of survey respondents – 44% of renters – cited the cost to rent in high-priced housing markets as the number one barrier to entry into homeownership. This is potentially forcing renters to wait longer to have the necessary down payment in these communities.”
A graph in the March 2019 Home Price Report offers the following information from renters questioned for the survey:
44% feel they cannot afford a down payment.
43% feel they “can’t afford a home.”
40% felt there were “no affordable homes where I want to live.”
35% said: “My current living situation meets my needs.”
17% said: “I would not qualify for a mortgage.”
14% said they “like the mobility that renting gives me.
The rate of home-price growth is expected to roller-coaster before steadying, says the report. “Looking ahead, after some initial moderation in early 2019, the CoreLogic HPI Forecast indicates home prices will begin to pick up and increase by 4.8% on a year-over-year basis from March 2019 to March 2020. On a month-over-month basis, home prices are expected to decrease by 0.3% from March 2019 to April 2019.”
“The U.S. housing market continues to cool, primarily due to some of our priciest markets moving into frigid waters,” said Ralph McLaughlin, deputy chief economist at CoreLogic. “But the broader market looks more temperate as supply and demand come into balance. With mortgage rates flat and inventory picking up, we expect more buyers to take advantage of easing housing market headwinds.”