HOUSTON – (By Dale King, Realty News Report) — Home prices continued to skyrocket in 2021, say most Realtors and real estate market watchers nationwide along with would-be home buyers and folks who had hoped to put their domiciles on the block at a reasonable figure.
The upward price curve was also confirmed by researchers at CoreLogic, the global property information, analytics and data-enabled solutions provider. Its latest analysis of the real estate market says sticker prices on residences “more than doubled in 2021, averaging 15 percent for the full year compared to 6 percent in 2020.”
But that trend is going to change – big time – now that 2022 is here, the realty research firm predicts.
CoreLogic’s Home Price Index (HPI) and HPI Forecast for 2021 released last week says: “Price gains are predicted to start 2022 above 10 percent, but steadily slow to 3.5 percent by December.”
The reason? “Economic factors [will be] set in motion in 2022 to relieve pressures on the market.”
That’s not as forbidding as it sounds, says the survey. “TheCoreLogic Market Risk Indicators suggest a small probability of a nationwide price decline, and points to the larger likelihood that a fall in price will be limited to specific, at-risk markets,” the report postulates. “Still, the CoreLogic HPI Forecast shows the national 12-month growth cycle steadily slowing during 2022.”
The report makes only a single reference to Houston, one that doesn’t seem terribly alarming. The document warns that a dozen or so regional markets in the US could see a price bust because the current cost of purchasing homes in those communities has heated up intensely — and prices are just too high.
“The CoreLogic Market Risk Indicator (MRI), a monthly update of the overall health of housing markets across the country, predicts that municipalities such Prescott, Ariz.; Merced, Calif.; Lake Havasu-Kingman, Ariz. and Worcester, Mass., are at a very high risk (+70 percent probability) of a decline in home prices over the next 12 months. Kalamazoo-Portage, Mich., is also at an elevated risk level (50-70 percent) for a drop-off.”
Home prices in the Prescott-Phoenix area have shot up 30.2 percent just this past year, and other markets thumbtacked in the asking price danger zone aren’t far behind.
But Houston came in with a 14.8 percent hike in home prices this past year, which places the Space City at the low end of the bust barometer. Still, says CoreLogic, price stability in Houston is something to watch.
Also, at the lower level of the appreciation scale, Washington, D.C., saw home prices increase just 3.7 percent last year and house prices in New York increased 7 percent.
Population growth in some states added to homebuying demand in 2021, pushing up home prices. Arizona, Florida, Utah and Nevada were all in the top 10 for percentage increase in population growth in 2021.
The surge in home price appreciation was felt across the country, says CoreLogic, with most states showing higher appreciation in December 2021 than in December 2020. Florida had the biggest acceleration in home price growth from December 2020 (+8.4 percent) to December 2021 (+27.1 percent). Both Washington, D.C. and Alaska saw a slowdown in annual appreciation.
As 2022 moves into its second month, home prices in some regions may start to slip. “During the early months of the year, cost hikes are projected to remain above 10 percent while decelerating each month to a 12-month rise of 3.5 percent by December 2022,” the document notes. “Comparing the average projected national HPI for 2022 with the previous year, the CoreLogic HPI Forecast shows the annual average up 9.6 percent in 2022.”
“Much of what we’ve seen in the run-up of home prices over the last year has been the result of a perfect storm of supply and demand pressures,” said Dr. Frank Nothaft, chief economist at CoreLogic.
“As we move further into 2022, economic factors – such as new home building and a rise in mortgage rates – are in motion to help relieve some of this pressure and steadily temper the rapid home price acceleration seen in 2021.”
CoreLogic lists the following nuggets among “other top takeaways” from its housing report:
- In December, Naples, Fla., logged the highest year-over-year home price increase at 37.6 percent. Punta Gorda, Fla., had the second-highest ranking at 35 percent.
- At the state level, the Southern, Southwest and Mountain West regions continued to dominate the top three spots for national home price growth, with Arizona leading the way at 28.4 percent. Florida ranked second with a 27.1 percent growth and Utah followed in third place at 25.2 percent.
Feb. 6, 2022 Realty News Report Copyright 2022.
ECONOMIC FORECAST – The RALPH BIVINS PROJECT podcast welcomed guest Frank Nothaft, chief economist of CoreLogic. LISTEN: