- Tech hubs across the U.S. and the Western region continue to lead the way in price growth
- Supply and demand pressures converge, creating barriers to entry for first-time buyers
IRVINE, Calif., November 2, 2021—CoreLogic, a leading global property information, analytics and data-enabled solutions provider, today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for September 2021.
Demand for homebuying remained strong through the end of the summer. However, the ongoing housing supply shortage has continued to drive up prices, which increased 18% year over year in September, to record highs 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.
As millennials continue to make up a large part of homebuying demand and flock to tech hubs like Seattle; San Jose, California and Austin, Texas, we may see this challenge intensify. This is reflected in a recent CoreLogic consumer survey, with 47.9% of this cohort stating they cannot afford to purchase a home in their preferred area.
“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.”
- Nationally, home prices increased 18% in September 2021, compared to September 2020. On a month-over-month basis, home prices increased by 1.1% compared to August 2021.
- In September, appreciation of detached properties (19.6%) was 7.4 percentage points higher than that of attached properties (12.2%).
- Home price gains are projected to slow to a 1.9% increase by September 2022, as ongoing affordability challenges deter some potential buyers.
- In September, home prices continued to rise sharply in Twin Falls, Idaho, which logged the highest year-over-year increase at 36.3%. For the first time since May 2021, Michigan City, Indiana, outpaced Bend, Oregon, to claim the second-highest ranking for home price gains at 35.5% year over year.
- At the state level, the Mountain West continued to dominate the top spots, with Idaho and Arizona again leading the way with the strongest price growth at 30.1% and 29.6%, respectively, and Utah ranking third at 26.2%.
“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.”
The next CoreLogic HPI press release, featuring October 2021 data, will be issued on December 7, 2021, at 8 a.m. ET.
The CoreLogic HPI™ is built on industry-leading public record, servicing and securities real-estate databases and incorporates more than 45 years of repeat-sales transactions for analyzing home price trends. Generally released on the first Tuesday of each month with an average five-week lag, the CoreLogic HPI is designed to provide an early indication of home price trends by market segment and for the “Single-Family Combined” tier, representing the most comprehensive set of properties, including all sales for single-family attached and single-family detached properties. The indices are fully revised with each release and employ techniques to signal turning points sooner. The CoreLogic HPI provides measures for multiple market segments, referred to as tiers, based on property type, price, time between sales, loan type (conforming vs. non-conforming) and distressed sales. Broad national coverage is available from the national level down to ZIP Code, including non-disclosure states.
CoreLogic HPI Forecasts™ are based on a two-stage, error-correction econometric model that combines the equilibrium home price—as a function of real disposable income per capita—with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks like changes in the unemployment rate. With a 30-year forecast horizon, CoreLogic HPI Forecasts project CoreLogic HPI levels for two tiers — “Single-Family Combined” (both attached and detached) and “Single-Family Combined Excluding Distressed Sales.” As a companion to the CoreLogic HPI Forecasts, Stress-Testing Scenarios align with Comprehensive Capital Analysis and Review (CCAR) national scenarios to project five years of home prices under baseline, adverse and severely adverse scenarios at state, metropolitan areas and ZIP Code levels. The forecast accuracy represents a 95% statistical confidence interval with a +/- 2% margin of error for the index.
About Market Risk Indicator
Market Risk Indicators are a subscription-based analytics solution that provide monthly updates on the overall “health” of housing markets across the country. CoreLogic data scientists combine world-class analytics with detailed economic and housing data to help determine the likelihood of a housing bubble burst in 392 major metros and all 50 states. Market Risk Indicators is a multi-phase regression model that provides a probability score (from 1 to 100) on the likelihood of two scenarios per metro: a >10% price reduction and a ≤ 10% price reduction. The higher the score, the higher the risk of a price reduction.
About the Market Condition Indicators
As part of the CoreLogic HPI and HPI Forecasts offerings, Market Condition Indicators are available for all metropolitan areas and identify individual markets as “overvalued”, “at value”, or “undervalued.” These indicators are derived from the long-term fundamental values, which are a function of real disposable income per capita. Markets are labeled as overvalued if the current home price indexes exceed their long-term values by greater than 10%, and undervalued where the long-term values exceed the index levels by greater than 10%.
About the CoreLogic Consumer Housing Sentiment Study
3,000+ consumers were surveyed by CoreLogic via Qualtrics. The study is an annual pulse of U.S. housing market dynamics concentrated on consumers looking to purchase a home, consumers not looking to purchase a home, and current mortgage holder. The survey was conducted in April 2021 and hosted on Qualtrics.
The survey has a sampling error of ~3% at the total respondent level with a 95% confidence level.
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