Home Prices Continue to Rise, Grow 7% in March

U.S. home prices continued their inexorable march upward this spring, climbing to 7% over March 2017 levels and 1.4% higher than they were in February.

“Home prices grew briskly in the first quarter of 2018,” said Frank Nothaft, chief economist at real estate analysis firm CoreLogic, which released its monthly stats on Tuesday. “High demand and limited supply have pushed home prices above where they were in early 2006. New construction still lags [behind] historically normal levels, keeping upward pressure on prices.”

As has been the case for the last several years, Western states continued to see a significant share of the gains. Home prices in the Las Vegas metropolitan area topped the list with 12.6% year-over-year growth; San Francisco followed closely behind with 10.8%, with Denver, Los Angeles, and San Diego rounding out the top five.

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Boston led the way on the East Coast with 5.7% home-price growth, well below even fifth-place San Diego, while Chicagoans saw just 2.8% growth and Washington, D.C. clocked in at 2.5%.

The numbers could be good news for seniors looking into converting their home equity into retirement funds, either through reverse mortgages or simply by selling and moving to a smaller property. But CoreLogic cautioned that these impressive gains are outpacing younger homeowners’ ability to pay for properties, which could cause headaches in markets around the country.

“The dream of homeownership continues to fade away for the average prospective buyer,” CoreLogic president and CEO Frank Martell said in a statement announcing the results. “Lower-priced homes are appreciating much faster than higher-priced properties, making the affordability crisis progressively worse.”

In addition, analysts who have increasingly warned of an overheated housing market might have reason to worry: About half of the top 50 metro areas have “overvalued” housing stocks, which CoreLogic defines  as regions in which home-price gains outstrip income growth.

“This is clearly an unsustainable condition that can only be remedied by aggressive and coordinated public/private sector actions,” Martell said.

Written by Alex Spanko

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  • No doubt what Alex has stated in his article is fact, However for the senior this does bring about the opportunities Alex referees to!

    This should spur a lot of interest in our H4P program. Now is the time to go after the real-estate industry. Call on brokers, show them how they can increase their business by tapping into this new market for themselves!

    We have the sleeping giant product that fits in perfect with Alex’s article!

    John A. Smaldone
    http://www.hanover-financial.com

  • Articles like those above are so misleading. The west coast continues to lead the nation. It skews the increase in the average price of a home in the US as have major pockets of more expensive homes in high population density areas along the east coast.

    All real estate is local. The same fallacy can be extended to the HECM amortization schedule. Few homes in the US rise at 4% per annum.

    I have heard two voices in the industry begin addressing the need for geocentric principal limit factors. After all something needs to be done to lower HECM annual losses.

  • Quote:
    “Boston led the way on the East Coast with 5.7% home-price growth,”

    This seems right-on from my observation. A typical $600,000 home a year ago, would be selling with about a 5% increase this year. We had our huge run-ups last year and the year before, so a cool-down I’d view as a positive.

    • Ed,

      All real estate is local.

      So while you are probably right about Boston as to prices, it is not good that the highest growth in home prices is not even 7% in all of the East Coast.

      The only top four California city by population not in the top five cities for home price growth was San Jose which is somewhat surprising. The only California city listed,not bordered by the Pacific Ocean is San Jose whose northern border is the San Francisco Bay.

      But then again California economy just rose to become the fifth largest economy when compared to the economies of all countries. Only the total US (including California), China, Japan, and Germany have larger economies. So despite the devastation of the 2008 Recession on California, in particular, with Stockton, CA becoming the foreclosure capital in the US, California has not only bounced back but excelled.

      With Las Vegas and Denver in the mix, this once again shows that the West is strong as to home price growth.Things will change but for now the strength in the new home and resale home market is the west.

      Yet population wise the two cities outside of California combined only have 21% of the population that the three California cities do. Los Angeles alone has a population that is 11.3% larger than the populations of the other four cities combined.

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