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Housing Price Growth Breaks Record, But Likely to Slow
By Jesse Williams
Arecent report has found that the explosive growth rate in housing prices has reached historic levels, with a year-overyear gain of 18% in July coming in as the highest 12-month increase since that data index was created in 1976.
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After extremely limited supply and superheated demand fueled these increases, the report by analytics company CoreLogic anticipated significantly slower growth over the next year, projecting 2.7% growth in home prices between July 2021 and July 2022.
“July’s annual home price growth was the most that we have ever seen in the 45-year history of the CoreLogic Home Price Index,” said Frank Nothaft, CoreLogic chief economist, in a statement. “This price gain has far exceeded income growth and eroded affordability. In the coming months, this will temper demand and lead to a slowing in price growth.”
The takeaway:
A continued lack of housing supply, particularly affordable stock, will severely limit home-price appreciation, according to the report, as prices outstrip incomes. At press time, though, prices were still rising at a rapid rate, jumping 1.8% between June and July.
“Home-price appreciation continues to escalate as millennials enter their prime home-buying years, renters look to escape skyrocketing rents and deep-pocketed investors drive demand,” said CoreLogic CEO Frank Martell in a statement.
Single-family homes saw nearly double the appreciation of condos or other attached properties, though at an 11.6% increase, condos still saw their largest single year jump since 2006.
Here are the top five states and top five cities for home-price appreciation, according to the report.
States
- Idaho at 33.6% - Arizona at 28.4% - Utah at 25.7% - Montana at 23.5% - Nevada at 22.4%
Cities
- Phoenix, Ariz., at 29.7% - San Diego, Calif., at 23.7% - Las Vegas, Nev., at 21.1% - Denver, Colo., at 19.3% - Los Angeles, Calif., at 14.6%
The report also highlighted five metro areas most at risk of seeing a price decline over the next year, all with a 25-50% chance of depreciation. Those cities are:
- Springfield, Mass. - Chico, Calif. - Merced, Calif. - Norwich-New London, Conn. - Beaumont-Port Arthur, Texas RE
Jesse Williams is RISMedia’s associate online editor.
