Breaking Down The Details on Huge Home Price Appreciation
Nov 2 2021, 12:16PM
CoreLogic says that demand for homebuying remained strong through the end of summer. Along with the ongoing shortage of available homes, demand drove the annual price increase for September to 18 percent. Prices rose 1.1 percent compared to August.
The company says record high prices are creating additional challenges for entry into the homebuying market. "High demand and low supply levels for entry-level homes, in particular, are sidelining many would-be first-time buyers."
Detached properties continue to appreciate at a much higher rate than do those that are attached. The annual increase for detached properties in September was 19.6 percent, 7.4 percentage points higher than for attached homes.
"The pandemic led prospective buyers to seek detached homes in communities with lower population density, such as suburbs and exurbs," said Frank Martell, president and CEO of CoreLogic. "As we head into 2022, we expect some moderation in the current pattern of flight away from urban cores as the pandemic wanes."
Millennials make up a large share of homebuyers and they tend to flock to tech hubs like Seattle, San Jose, and Austin. CoreLogic says this could make homebuying hurdles intensify. A recent CoreLogic consumer survey found 47.9 percent of the Millennial cohort felt they could not afford to purchase a home in their preferred area.
The Mountain West continued to have the highest rates of appreciation. Idaho and Arizona were again in the top spots with respective growth rates of 30.1 percent and 29.6 percent while Utah was third at 26.2 percent. Prices in Twin Falls Idaho were up 36.3 percent year-over-year in September and Michigan City, Indiana pushed Bend, Oregon out of second place with a 35.5 annual increase.
"Remote work has allowed many employees to buy homes further away from their office," said Dr. Frank Nothaft, chief economist at CoreLogic. "These homes are often in the suburbs or exurbs, where property prices and population density are lower and single-family detached housing more common.
CoreLogic's forward looking Home Price Index is projecting a slowdown in appreciation over the next 12 months as affordability issues deflate demand. The forecast is for prices to only grow by 1.9 percent by September 2022.
Download Mortgage Calculator Toolkit App
Current version for Android devices - 1.2.1