Home Prices Shoot Up 6.9% in April, Raising Concerns About Overheating

Home prices in the United States rose yet again last month, continuing a steady march that has some raising concerns about overheated housing markets in certain areas.

CoreLogic’s Home Price Index rose by 6.9% between April 2017 and April 2018, the real estate analytics firm reported Tuesday, with a 1.2% month-over-month gain from March. As in previous months, CoreLogic attributed the significant increase to a lack of available options on the market.

“The best antidote for rising home prices is additional supply,” CoreLogic chief economist Frank Nothaft said in a statement announcing the results. “New construction has failed to keep up with and meet new housing growth or replace existing inventory.”

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Western homebuyers once again saw the most substantial uptick in home prices, with a 12.8% increase in Washington state from this time last year. Idaho followed with 12.4%, with Nevada and Utah close behind at 12.2% and 11.5%, respectively. 

Booming levels of home prices and home equity have been a consistent theme in the industry over the last year to 18 months, with Western states in particular benefiting from the trends: In its most recent set of region-specific data, reverse mortgage data firm Reverse Market Insight reported year-over-year origination growth of 51.8% and 45.3% in Washington state and Oregon, respectively.

King County, Washington — of which Seattle is the county seat — also loved an impressive 41.6% in Home Equity Conversion Mortgage endorsement growth in the first quarter of 2018.

Still, ever-rising home prices aren’t always a positive: CoreLogic determined that 40% of the top 100 metro areas have “overvalued” housing markets, as determined by the relationship between home values and local income levels. Among the top 50 markets, a full 52% were overvalued, CoreLogic determined.

“Additionally, as of April 2018, 28% of the top 100 metropolitan areas were undervalued and 32% were at value,” CoreLogic observed.

Interestingly, the red-hot San Francisco Bay Area market was determined to be “at value,” while the Las Vegas, Denver, and Los Angeles marketplaces were considered “overvalued.”

Written by Alex Spanko