Home prices increased 4% year over year in December, CoreLogic said in its latest Home Price Forecast. The company now predicts the U.S. price index will rise by 5.2% come December 2020.
Throughout 2019, CoreLogic indicates the U.S. housing market experienced varied price growth. This is especially so for the nation’s lower-priced homes, which saw home prices climb significantly in 2019.
“Moderately priced homes are in high demand and short supply, pushing up values and eroding affordability for first-time buyers,” said Frank Nothaft, chief economist at CoreLogic. “Homes that sold for 25% or more below the local median price experienced a 5.9% price gain in 2019, compared with a 3.7% gain for homes that sold for 25% or more above the median.”
Out of the top 50 markets covered in the report, CoreLogic says that 40% were overvalued, 20% were undervalued and the remaining 40% were at value in December 2019.
According to the company’s data, these are the 12-month HPI changes for some of the nation’s top single-family housing markets:
Undervalued markets:
- San Francisco-Redwood City-South San Francisco, California: Increased by 2.2%
Normal:
- Los Angeles-Long Beach-Glendale, California: Increased by 3.3%
- Boston, Massachusetts: Increased by 3.3%
- Chicago-Naperville-Arlington Heights, Illinois: Increased by 0.8%
Overvalued:
- Washington-Arlington-Alexandria, D.C.-Virginia-Maryland-West Virginia: Increased by 4.5%
- Denver-Aurora-Lakewood, Colorado: Increased by 3.9%
- Houston-The Woodlands-Sugar Land, Texas: Increased by 3.5%
- Las Vegas-Henderson-Paradise, Nevada: Increased by 2.9%
- Miami-Miami Beach-Kendall, Florida: Increased by 2.3%
- New York-New Jersey-White Plains, New York-New Jersey: Increased by 0.1%
Overvalued markets have homes that 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.
“On a national level, home prices are on an upswing,” said Frank Martell, president and CEO of CoreLogic. “Price growth is likely to accelerate in 2020. And while demand for homeownership has continued to increase for millennials, particularly those in their 30s, 74% admit they have had to make significant financial sacrifices to afford a home. This could become an even bigger factor as home prices reach new heights during 2020.”
