Photo: Robert Clark
National US home prices rose again in December, spurred by increased demand and limited supply.
Increased job growth is creating more homebuyers but supply continues to tighten, driving up home prices, according to the February CoreLogic Home Price Insights (HPI) released today.
Over the last year, national home prices rose 6.6 percent in December — this marked the fifth consecutive month of annual price growth. At the same time, prices were up 0.5 percent from the previous month.
CoreLogic included distressed home sales in its calculation of home price appreciation for the HPI.
And while the number of available homes for sale has remained “very low” in recent months, job growth is rising. Also, the national unemployment rate fell to 4.1 percent in December 2017, the lowest level in 17 years, further supporting an increase in the homebuyer population.
“Job growth increases the income and financial wealth of households, placing families in a better economic position to afford mortgage payments and the down payment. Metro areas with low unemployment rates may offer more opportunities to earn income and build wealth. These areas also attract workers from other parts of the US, adding to housing demand in their area,” Dr. Frank Nothaft, chief economist for CoreLogic, tells BuzzBuzzNews.
Additionally, rising income and consumer confidence has helped boost the number of prospective homebuyers, and thus increasing demand. Factor in tight inventory levels and the result is the rise in home prices we’re seeing now.
Four states recorded double-digit annual price growth in January: Washington (12 percent), Nevada (11 percent), and Idaho (10.7 percent).
Increased demand is having a similar effect on the rental market, driving up rents nationwide — especially in larger markets.
Meantime, the CoreLogic HPI predicts national home prices will increase 4.3 percent on a year-over-year basis from December 2017 to December 2018, but will decrease on a monthly basis by 0.4 percent from December 2017 to January 2018.
And, with continued home price appreciation predicted in 2018, finding affordable housing could prove even more challenging for first-time home
“As home prices and the cost of originating loans rise, affordability continues to erode, making it more challenging for both first time buyers and moderate-income families to buy. At this point, we estimate that more than one-third of the 100 largest metropolitan areas are overvalued,” Frank Martell, president and CEO of CoreLogic, says in the digital release.
First-time homebuyers can best prepare for buying by getting their financial house in order.
“Pay down some or all other debts or, at a minimum, have no recent credit delinquencies; keep records to show that they have been able to meet regular monthly payments for rent, utilities and other recurring obligations; and have been able to save enough to make the down payment, closing costs and still have some savings in reserve for unexpected contingencies,” Nothaft says.
Also, getting a letter of pre-approval by a lender helps give a seller added confidence that the prospective homebuyer will qualify for a mortgage. And, first-time homebuyers shouldn’t rush into a sale.
“Once they find the type of neighborhoods and homes that meet their needs, they will be in a position to seriously consider the various homes that are on the market for sale,” advises. Nothaft
Click here to read the entire release.