CoreLogic’s latest report notes high buyer demand amid a supply shortage. From Aug. to Sept., home prices rose 1.1% to reach a new high, but they may soon moderate.
MILWAUKEE – Following strong end-of-summer demand, home prices continued to surge entering the fall months, according to CoreLogic’s latest Home Price Index (HPI) report.
Prices rose 18% annually in September, the company reported, brought on by high demand amid a supply shortage. Home prices rose 1.1% from August to September, reaching a new record high. As a result, many homebuyers – especially first-time buyers – are being pushed out of the housing market.
However, the price increase is good news for homeowners who are seeing consistent equity gains.
Where homebuyers are purchasing homes could change
Millennials make up a large number of homebuyers in today’s market, accounting for 67% of first-time homebuyer applications and 37% of repeat buyer applications in 2021, according to a CoreLogic study. As they increasingly take over the housing market, millennials are increasing housing demand in popular tech hubs like Seattle, San Jose and Austin, CoreLogic said.
As the coronavirus pandemic subsides, the growing race to the suburbs seen over the past year could lessen, too.
“The pandemic led prospective buyers to seek detached homes in communities with lower population density, such as suburbs and exurbs,” CoreLogic President and CEO Frank Martell said. “As we head into 2022, we expect some moderation in the current pattern of flight away from urban cores as the pandemic wanes.”
High home prices could drop in Nov.
CoreLogic explained that the heightened suburbs movement was a result of pandemic-induced remote working.
“Remote work has allowed many employees to buy homes further away from their office,” CoreLogic Chief Economist Frank Nothaft said. “These homes are often in the suburbs or exurbs, where property prices and population density are lower and single-family detached housing more common.”
Home price gains to slow significantly over next year
Home prices have been growing at close to 20% annually, but that growth is expected to slow significantly over the next year, CoreLogic predicted in its HPI Forecast report. Such increases are projected to slow to an annual gain of 1.9% by September 2022.
In fact, some markets are even facing a high likelihood of home price declines over the next year. Springfield, Massachusetts and Merced, California each have a more than 70% likelihood of home price declines over the next 12 months, CoreLogic projects.
Reading, Pennsylvania, Worcester, Massachusetts and Norwich-New London, Connecticut each have a 50% to 70% likelihood of home price declines in the next year.
Homeowners can take advantage of high home values now through a cash-out refinance.
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