Average single-family home prices in December 2016 were 7.2% higher than at the same point in 2015, according to a report released Tuesday by CoreLogic — but the gaudy percentage might not necessarily lead to immediate results for the reverse mortgage industry, which struggled in that same timespan.
“It’s always better for the industry to have more home equity value available to potential clients, but it takes a while for that to translate to loan volume,” said John K. Lunde, president of Reverse Market Insight, Inc., a Dana Point, Calif.-based research firm.
The Pacific Northwest saw the greatest home-value gains during that period, with Oregon posting a 10.8% rise and Washington state seeing 10.3% growth, according to CoreLogic. Idaho, Colorado, and Florida rounded out the real estate analytics firm’s list of the top five year-over-year gainers for home prices. Of the 50 states and the District of Columbia, only Wyoming saw contraction with a decline of 0.3%.
Among metropolitan areas, Denver led the way with a 9.9% jump, followed by Boston at 6.9%; there was a tie for third place at 6.8% between the Los Angeles and Miami metro regions.
December 2016 marked the 59th consecutive month of year-over-year single-family home price gains in the United States, despite industry worries over increased mortgage rates. The figure also represented the most significant annual increase since June 2014, when the percentage increase hit 5.0% and hovered there for about a year and a half.
CoreLogic’s analysts predict further home-price gains of 4.7% through December 2017, even with industry experts predicting higher mortgage rates during that span.
Reverse mortgage volume tends to thrive on high home equity levels when a greater number of borrowers can qualify. However, industry pressures could counter equity and price tailwinds, Lunde says. “[There’s still] the challenge of marketing the product at a reasonable cost to consumers that can qualify under the Financial Assessment rules.”
Written by Alex Spanko