Frank Nothaft, chief economist of CoreLogic.
HOUSTON – (By Dale King, Realty News Report) – The days of low mortgage rates may be coming to an end, and with them, decent increases in home prices and respectable numbers of houses sold, says a study by CoreLogic, a global property information and analytics firm.
But this doesn’t mean the future will be pockmarked with gloom and doom. In fact, researchers at the Irvine, Calif.-based firm say if job levels and salaries remain strong, the cost of buying a house may rise more than anticipated, and mortgage rates may slide back a tad.
“The slowing growth in home prices was inevitable in many respects as buyers pull back in the face of higher borrowing and ownership costs,” said Frank Martell, president and CEO of CoreLogic. “As we head into 2019, we can expect continued strong employment growth and rising incomes which could support a reacceleration in home-price appreciation later this year.”
Dr. Frank Nothaft, chief economist for CoreLogic, noted mortgage rates today are lower than they were a year ago. “With interest rates at this level, we expect a solid home-buying season this spring,” he said. “The spike in mortgage interest rates last fall chilled buyer activity and led to a slowdown in home sales and price growth.”
As stated by Liza McIntosh, senior strategist, “This slowdown was inevitable, but CoreLogic economists are still predicting a strong home-buying season this spring.”
Looking ahead, the CoreLogic Home Price Index (HPI) foresees the 2019 annual average home price will increase 3.4% above the 2018 national annual average of 4.4%. On a month-over-month basis, prices nationally increased by only 0.1% in January 2019, the report says.
The numbers for the State of Texas and some of its larger metros vary little from the figures reported for the USA. While the nation saw home prices rise an average of 4.4% during 2018, Texas racked up a 4.1% tally. The HPI rose 0.1% nationally last year; -0.1% in Texas.
The sizeable price hikes came in North Texas, says the report. The Fort Worth-Arlington metro division topped the report’s list with prices increasing 5.9% last year. Next came the Dallas-Plano-Irving metro area with a 4.5% jump, then San Antonio-New Braunfels metropolitan statistical area at 4.43%; Houston-The Woodlands-Sugar Land MSA at 3.99% and the Austin-Round Rock area at 3.75%.
The CoreLogic report came up with a couple of additional bits of information:
The 12-month home-price growth rate was slowest since August 2012.
Since peaking at 6.6% last April, annual home price gains have declined or held steady each month.
The CoreLogic HPI Forecast is a projection of home prices determined by using CoreLogic’s Home Price Index along with other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
The CoreLogic Market Condition Indicators (MCI), an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, showed that 35% of metropolitan areas had an overvalued housing market as of January 2019. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued, by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals (such as disposable income).
In addition, as of January 2019, 27% of the top 100 metropolitan areas were undervalued, and 38% were at value.
When looking at only the top 50 markets based on housing stock, 40% were overvalued, 18% were undervalued and 42% were at value in January 2019. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10% below the sustainable level.
March 12, 2019 Realty News Report Copyright 2019