A Simple Question: Where are Real Estate Prices Heading?
CoreLogic: Home-price growth slows in January, with further deceleration possible
Courtesy of CoreLogic.
U.S. home prices rose annually in January, and they are expected to continue to climb on a national basis this year and reach a new high in March. However, some regions are lagging others, CoreLogic said in its monthly Home Price Insights report.
Nationally, home prices rose 3.3% year-over-year in January and were roughly flat month over month, with a gain of just 0.04% from December.
Meanwhile, the median sales price for all single-family homes in the U.S. was $375,000.
“Flattening home price changes over the last six months suggest further price deceleration is ahead,” Chief Economist Selma Hepp said in a press release. “More importantly, compressed monthly changes highlight the general lack of homebuying demand that continues to characterize the current housing market.”
The Northeast has proven the most resilient in the face of slowing job growth, high interest rates and affordability issues, while the Mountain West has seen prices fall furthest from their record highs, CoreLogic added.
Indeed, the Northeast led the way in price growth, with all but two of the top 10 hottest markets located in New York, New Jersey and Connecticut. On the flip side, most of the 10 coolest markets were in the Sunbelt, with Florida claiming five of them.
Parts of the Sunbelt — Florida and Arizona in particular — are most at risk for price declines, while western New York is gaining in popularity.
Looking ahead, the CoreLogic HPI Forecast indicates home prices will rise 3.6% between January 2025 and January 2026.
“While this year’s cold winter and large natural disasters play a role in dampening demand, falling consumer sentiment suggests potential homebuyers are wary of the short-term economic outlook and future inflation,” Hepp added. “Nevertheless, with the spring homebuying season upon us, the recent improvements in mortgage rates may help invite homebuyers back into the market.”
Courtesy of CoreLogic.
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Forbes surveyed housing experts on what they think about the market – a sample question:
Where are real estate prices heading?
Fleming: “Our research has found that in past recessions, house prices show their “downside stickiness,” meaning they remain flat or their growth slows during economic downturns, but often do not decline much with one exception – the Great Recession. Because of the downside stickiness of home prices, and the supply and demand imbalance that exists in the market today, we anticipate nominal house price appreciation to actually accelerate this summer. House prices are going up!”
Marr: “As mortgage rates decline, prices rise. Demand fell, but so did supply, which muted any impact to home prices. Right now, they are continuing to grow at the same pace as before the pandemic. Growth may slow as the economic impacts grow, but the consensus is that home prices will continue to rise over the year.”
Tucker: “Overall, Zillow is forecasting a slight decline in home prices through October, followed by a slow recovery through 2021.”
McLaughlin: “We think price growth is going to slow, and even possibly turn negative, by the beginning of next year, as lower aggregate demand emerges and legislation that protects homeowners from foreclosure expire. However, we do expect price grow quite strongly by the end of next year, growing between 4-6% on a year-over-year basis.”
Teta: “Some pockets around the country may do well – like suburban areas around big cities if large numbers of people decide to move because of concerns that it’s too risky to stay in densely populated places where the virus has spread so rampantly. That could sew a silver lining into the market. But it may be more likely that the price boom of recent years is in serious jeopardy.”
