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In May 2021 severe inventory shortages and sustained demand pushed home prices to record highs according to CoreLogic’s latest CoreLogic Home Price Index, reporting that the year-over-year increase in home prices is at its highest level since 2005.
Because of the low borrowing rates, many millennials and Gen Z home buyers continue to move into the hot market but high prices are discouraging increasing numbers of first-time and low-income families.
According to a recent CoreLogic survey currently, 82% of people say housing affordability is a key problem. 33% of customers noted they would wait to buy or not buy at all instead of making sacrifices on their purchase.
As the speed of home price rises outpace the benefits of lower borrowing costs many first-time buyers are hand-tied across the country.
Frank Martell, president and CEO of CoreLogic said that the younger and first-time buyers, do not have sufficient savings for a down payment, closing costs, and cash reserves.
In the second half of 2021, price rises are expected to continue pushing prospective buyers out of the market in many areas and slowing home price growth by the next year.
Dr. Frank Nothaft, chief economist at CoreLogic said, in comparison to the 2005 bubble fueled by risky loans and lenient underwriting, the loans today, with high-risk features are absent and mortgage underwriting is careful.
But the demand and supply imbalance powered by a drop in mortgage rates to less than half to what they were in 2005 and a scarcity of for-sale homes has led to these exorbitant sales prices.
Top Home Price Index
- In May 2021 across the country home prices increased 15.4%, compared with May 2020. Home prices increased by 2.3% on a month-over-month basis, compared to April 2021.
- In May as prospective buyers continue to seek out more space, detached properties appreciated 17.2% which was nearly double of attached properties 9.1%.
- By May 2022 the home prices are projected to increase 3.4% because affordability will discourage potential buyers and lead to a slowdown in-home price growth.
- In May, home prices rose 35% in the west with Twin Falls, Idaho, experiencing the highest year-over-year increase. Coeur d’Alene, Idaho, was second with a 32% year-over-year increase.
- As home buyers seek out more affordable locations with lower population density and attractive outdoor amenities states like Idaho and Arizona continued to have the strongest price growth of 30.3% and 23.4%. Utah also had a 20.4% year-over-year increase.
Reference Source: World Property Journey
