HOUSTON – (By Dale King, Realty News Report) –The dual pressures of severe inventory shortages and sustained demand pushed prices for houses in metros nationwide to record highs in May, says the CoreLogic Home Price Index and HPI Forecast for the fifth month of 2021.
“Home price gains nationwide, including distressed sales, increased year-over-year by 15.4% by May 2021 compared with May 2020 – the highest since 2005,” says the document. “No states posted an annual decline in home prices.”
But the report and a recent CoreLogic monthly update include some predictions of future cost shakiness. One is expected to impact Houston in the coming year, an eccentricity that could potentially send home prices in the Bayou City downward – not significantly, but certainly noticeably.
Houston Home Price Decline? May be 0.6 % Over the Next Year
“In markets like Houston, which was hit hard by the collapse of the oil industry and the recent hurricane season, home prices are expected to decline by 0.6% by May 2022.”
(The Houston Association of Realtors reported the average price of a single-family home sold in May was $387,105, up 30 percent from May of 2020.)
While the average national price increase from May 2020 to May 2021 was just over 15%, some city centers – such as San Diego – overshot that average. The CoreLogic report says the Golden State city by the Mexican border saw home prices rise 18.8% for the year ending in May 2021 and are forecast to increase an additional 10.9% over the next 12 months.
Still, Houston doesn’t face a potentially steep slide such as the report anticipates for a couple of the Massachusetts’ biggest metropolitan regions and a major California community. The CoreLogic Market Risk Indicator, a monthly update of the housing market, “predicts that metros such as Springfield and Worcester, Mass., and Chico, Calif., are at their greatest risk (25-30%) of a decline in home prices over the next 12 months.”
Also, “Oxnard-Thousand Oaks-Ventura, Calif., and Norwich-New London, Conn., are also at low risk (less than 25%) of a decline over the next 12 months.”
“As we look to the balance of 2021, we expect price rises to continue, which could very well push prospective buyers out of the market in many areas and slow home price growth over the next year,” says Frank Martell, president and CEO of CoreLogic, a global property information, analytics and data-enabled solutions provider.
Still, reports of skyrocketing prices and dwindling building supply are stoking the fires of a home sale market showing signs of trouble. “While many millennials and Gen Z home buyers continue to move into the hot market thanks to low borrowing rates, high prices are likely deterring increasing numbers of prospective buyers — especially first-time and low-income families.”
“Currently, 82% of consumers note housing affordability as a key problem,” according to another CoreLogic survey. “Additionally, 33% of respondents noted they would wait to buy or not buy at all rather than make sacrifices on their purchase.”
“First-time buyers are hitting a wall in many places around the country as the pace of home price rises outpace the benefits of lower borrowing costs,” adds Martell.
Top takeaways from the May CoreLogic report include:
- Appreciation of detached properties (17.2%) was nearly double that of attached properties (9.1%) as prospective buyers continue to seek out more space.
- Home prices are projected to increase 3.4% by May 2022, as affordability challenges deter potential buyers and cause a slowdown in home price growth.
- In May, home prices rose sharply in the west with Twin Falls, Idaho, experiencing the highest year-over-year increase at 35%. Coeur d’Alene, Idaho, ranked second with a year-over-year increase of 32%.
- At the state level, Idaho and Arizona continued to have the strongest price growth at 30.3% and 23.4%, respectively. Utah also had a 20.4% year-over-year increase as home buyers sought out more affordable locations with lower population density and attractive outdoor amenities.
Dr. Frank Nothaft, chief economist at CoreLogic, said loans being issued these days “are absent high-risk features, and mortgage underwriting is prudent. However, demand and supply imbalances — fueled by a drop in mortgage rates to less than one-half what they were in 2005 and a scarcity of for-sale homes — has fed the latest run-up in sales prices.”
July 12, 2021 Realty News Report Copyright 2021
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File: Home Prices Soar. Corelogic