First-time homebuyers should probably take advantage of the slower pace of price appreciation before an expected rise in pace.
CoreLogic’s Home Price Index report released today (10/1), shows that prices rose 3.6% year-over-year in August, a big slowdown from the 5.5% annual increase seen a year earlier.
But the firm’s HPI Forecast for a 5.8% increase by August 2020 suggests the pause in home price appreciation will be relatively short-lived. Prices are forecast to gain 0.3% in the month from August to September 2019.
While this means that first-time buyers may need to act sooner rather than later to make a move, they can at least be confident that entry level homes have shown a marked improvement in affordability.
“While the slowdown in appreciation occurred across the country at all price points, it was most pronounced at the lower end of the market,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Prices for the lowest-priced homes increased by 5.5%, compared with August 2018, when prices increased by 8.4%. This moderation in home-price growth should be welcome news to entry-level buyers.”
CoreLogic’s research shows that, of the 100 largest US metros by housing stock, 37% were overvalued as of August 2019, with 23% undervalued, and 40% at value.
Of the top 50 markets, 40% were overvalued, 16% were undervalued and 44% were at value.
The analysis defines an overvalued housing market as one in which home prices 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.
CoreLogic in association with RTi Research of Norwalk, Connecticut, conducted an extensive survey measuring consumer-housing sentiment among millennials.
Three quarters of millennial renters said they plan to buy a home within 3 years with older millennials (30-38) aspiring to own a single, stand-alone home in the suburbs that is somewhat secluded.
Meanwhile, younger millennials (21-29) lean towards modern apartment rentals in urban settings, with 55% of younger millennials saying they prefer to also live in lively neighborhoods. Still, 79% of younger millennials are confident that they will be homeowners in the future.
“The millennial cohort has now entered the housing market in force and is already driving major changes in buying and selling patterns. Almost half of the millennials over 30 years old have bought a house in the last three years. These folks are increasingly looking to move out of urban centers in favor of the suburbs, which offers more privacy and a greener environment,” said Frank Martell, president and CEO, CoreLogic. “Perhaps most significantly, almost 80% of all millennials are confident they will become homeowners in the future.”
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