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.
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