Annual price gains are accelerating
Home-price gains accelerated in March, defying predictions that lofty prices will eventually return to earth, and raising questions about how sustainable such a heated market can be.
The home-price index from real estate data provider CoreLogic showed national yearly price growth of 7% in March. That’s up from 6.4% in February. Annual price gains have averaged 6.5% so far in 2018, up from an average of 5.9% last year.
CoreLogic said lopsided supply-demand dynamics are to blame. “Lower-priced homes are appreciating much faster than higher-priced properties, making the affordability crisis even worse,” the company said. What’s worse, CoreLogic said half the nation’s housing markets are now “overvalued” — a metric it created by comparing current prices in a metro area to its long-run sustainable levels.
Read:America’s new great migration in search of lower property taxes
For some perspective on what analysts mean by an “affordability crisis,” the government reported earlier in April that wages are increasing by about 2.7% annually. Yet CoreLogic thinks home prices will rise 5.2% in the coming 12 months.
It’s worth repeating that analyst expectations about moderation in home-price growth have been wrong again and again. In May 2017, CoreLogic forecasted year-ahead price growth of 4.9%. The actual 7% gain dwarfed that estimate.
Also read:Why it’s so hard to forecast home prices for 2018 — and why that should worry you
Andrea Riquier reports on housing and banking from MarketWatch's New York newsroom. Follow her on Twitter @ARiquier.
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