Photo: Robert Clark
National home prices were on the rise again in June as housing market affordability continues to erode for many US homebuyers.
And, with home prices expected to continue to rise over the next year, more Millennials are reportedly distraught about housing affordability, according to a report released earlier this week by CoreLogic.
“A combination of an increasing number of potential buyers, especially Millennials looking to become first-time buyers, and a limited number of homes offered for sale has resulted in the acceleration in home-price growth over the last year,” Dr. Frank Nothaft, chief economist for CoreLogic, tells Livabl.
Over the last year, US home prices — including distressed sales — rose 6.8 percent in June, up 0.7 percent from the previous month. All 50 states recorded an increase in home prices compared to June 2017.
“Home prices have appreciated more rapidly for ‘entry-level’ homes, increasing the challenge for first-time buyers,” Nothaft says.
Four West Coast states — Nevada, Washington State, Idaho and Utah — all recorded double-digit annual home price appreciation in June. Nevada experienced the highest price increase at 12.6 percent.
At the metro-level, home prices soared 12.9 percent annually in the Las Vegas, NV submarket in June — the highest increase recorded of all the metros studied by CoreLogic. The Las Vegas market is characterized as “overvalued”, meaning home prices are above sustainable levels and affordability is compromised.
Of the 100 largest metros by housing stock, over 40 percent are overvalued.
CoreLogic expects national home prices will remain flat from June to July, but is predicting an increase of 5.1 percent over the next year.
Rising home prices stymied home sales in California, one of the country’s hottest housing markets in June. Sales were down from last year in the white-hot San Francisco Bay Area and Southern California markets by 9 and 12 percent, respectively.
Sales aren’t likely to see an uptick anytime soon either, CoreLogic cautions. Additional increases in home prices and mortgage rates over the next year will likely dampen sales.
And inventory is also likely to remain a serious challenge for prospective homebuyers.
“In terms of the for-sale inventory, this is the leanest inventory relative to the housing stock that we have seen in the past 35 years,” Nothaft says.
Meantime, some 48 percent of renters recently surveyed by CoreLogic and RTI Research were reportedly not interested in becoming homeowners because of affordability challenges.
The other 52 percent of respondents claimed that their current situation adequately “met their housing needs.”
And over half of all Millennial respondents said they were not currently interested in homeownership due to housing affordability, with 63 percent of younger Millennial renters (under 29 years old) citing affordability or lack of a downpayment as the chief reasons they’re not currently in the market to buy.
This is compared to 52 percent of Generation X renters and 36 percent of Baby Boomers who cited affordability challenges.
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