Every home buyer must expect many drastic changes in the real estate market this year. It has been forecasted by experts that property values will continue to shoot up without the slightest hint of slowing down.
CoreLogic, a real estate data research company, claimed that there is a 6.6 percent year-over-year increase in home pricing across the US. This has been indicated in their Home Price Index and HPI forecast report, which was released last December – the fifth consecutive month to show a year-over-year growth of more than 6 percent. Consequently, this means that prices will continue to upsurge this 2018.
Although last year’s November had a modest rise in pricing of about 0.5 percent, it is still projected that there will be an increase of 4.3 percent by the end of this year.
In spite of this prediction, Frank Nothaft, the chief economist from CoreLogic, stated that the number of properties up for sale still remains very low. However, he added that there will be an increase in home buyers because of salary growth and rising consumer confidence.
Since the unemployment rate has only dropped 4.1 percent in the end of December 2017 – the lowest in 17 years, this potentially will increase the number of prospective buyers and even their purchasing power. When appreciation in real estate value continues to skyrocket, this might eventually result in limited for-sale inventory and rising demand for new properties.
All these, nevertheless, will lead to inflation in housing markets.
Facts and Figures
As a matter of fact, the Market Condition Indicators or MCI data from CoreLogic stated that 35 percent of the country’s 100 major metropolitan areas have housing stocks that are worth more than they should be. In addition to this data, overpriced markets are worth at least 10 percent more than the usual, sustainable levels, while 28 percent of the largest markets are regarded as undervalued. Only 37 percent are valued just right.
The markets with the most overvalued properties are in the Western swath of the United States. It is there that the prices are going up continually, particularly for single-family houses. In Las Vegas, for example, the costs of buying residential property in December has increased over the year by 11.2 percent.
Comparatively, San Francisco also reported a 10.1 percent increase, while Denver was at 8.1 percent. Meanwhile, Los Angeles, Miami, Washington D.C., and Houston were overvalued with a year-over-year increase in property value of around 3.6 to 8.0 percent. The cities of San Francisco, Chicago, and Boston were all considered at value, with reported year-over-year growth in home prices of about 3.7 to 10.1 percent.
Through making comparisons to the long-run, sustainable levels of various home prices, MCI analysts can categorically arrange property values in individual markets as either at value, overvalued, or undervalued. This analysis, CoreLogic explains, is reinforced by the fundamentals of a local market such as disposable income.
On a different note, some states have experienced the highest annual price jump. These are Washington at 12 percent, Nevada at 11 percent, Idaho and Utah tied at 10.7 percent, Rhode Island and California both at 8.2 percent, Maine at 8.1 percent, and lastly, Colorado at 8 percent. But Alaska has the slowest bump with just around 1.6 percent, followed by Oklahoma with 1.7 percent, and Connecticut with 1.9 percent.
Most In-Demand Property
Typically valued under $300,000, the most in-demand type of residential property across the nation is the single-family housing unit. In fact, many real estate agents claim that this would usually stay on the market for just a week before being snapped up.
A Las Vegas realtor once listed a three-bedroom, two-bathroom property with a swimming pool for just around $300,000. He immediately got three offers from buyers who have never seen the property yet. The winning bidder, however, offered $5,000 over the asking price – and this all happened while giving a tour through the mobile phone app, FaceTime.
The CEO and president of CoreLogic, Frank Martell have said that affordability will continue to decrease because of the rising cost of originating loans and property value. This means that it will be harder for both low-income and first-time home buyers to penetrate the housing market.