REAL ESTATE

Home price growth hits 15-year high but is expected to taper in 2022

As the extremes of tight inventory, sharp buyer demand and favorable interest rates coalesced, home value growth in March reached heights not seen since the lead up to the housing bubble, according to CoreLogic.

The Home Price Index shot up 11.3% annually in March and 2.2% from February. It represents the index’s largest year-over-year growth since March 2006. The rate more than doubled the year-ago growth of 4.6%, while going above the forecasted 0.5% by nearly 23 times, though that prediction came amid many pandemic-related uncertainties. The data provider projects another 1.1% jump into April with spring buying in bloom.

“The 2021 spring homebuying season is trending strong — reflecting the many positive signs of economic recovery,” Frank Martell, president and CEO of CoreLogic, said in the report. “With prospective buyers continuing to be motivated by historically low mortgage rates, we anticipate sustained demand in the summer and early fall.”

While currently robust, CoreLogic expects these market conditions to top out, with affordability hurdles thinning the pack of homeshoppers. It’s especially challenging among first-time buyers, as prices for properties in the typical starter home price range grew 15.1% annually.

With fewer consumers expected to fight over the limited listings and increased vaccinations helping boost supply, the rate of value growth should taper off into next year. The data provider forecasts an annual price rise of 3.5% for March 2022.

At the state level, Idaho’s home price growth remained far ahead of the rest of the country, surging 25% year-over-year in March. Montana and Arizona came in behind that at 18.8% and 18%, respectively. At the other end, North Dakota had the lowest growth rate at 4.7%, trailed by 5% in New York and 5.5% in Mississippi.

Phoenix led among the 10 largest metro areas, seeing a year-over-year spike of 18.3%. San Diego followed with 14% and Denver at 12%.


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