IRVINE, Calif. — CoreLogic, a global property information, analytics company has released its CoreLogic Home Price Index and HPI Forecast for November 2017, which shows home prices are up both year over year and month over month. Home prices nationally increased year over year by 7% from November 2016 to November 2017, and on a month-over-month basis home prices increased by 1% in November 2017 compared with October 2017, according to the CoreLogic HPI.
Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 4.2% on a year-over-year basis from November 2017 to November 2018, and on a month-over-month basis home prices are expected to decrease by 0.4% from November 2017 to December 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
“Rising home prices are good news for home sellers, but add to the challenges that home buyers face,” said Dr. Frank Nothaft, Chief Economist for CoreLogic. “Growing numbers of first-time buyers find limited for-sale inventory for lower-priced homes, leading to both higher rates of price growth for ‘starter’ homes and further erosion of affordability.”
According to CoreLogic Market Condition Indicators (MCI) data, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 37% of metropolitan areas have an overvalued housing stock as of November 2017. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income. Also, as of November, 36% of the top 100 metropolitan areas were undervalued and 26% were at value (this% share is based on 99 markets for this report since data for Honolulu is currently unavailable). When looking at only the top 50 markets based on housing stock, 50% were overvalued, 14% were undervalued and 36% were at value. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level.
“Without a significant surge in new building and affordable housing stock, the relatively high level of growth in home prices of recent years will continue in most markets,” said Frank Martell, President and CEO of CoreLogic. “Although policymakers are increasingly looking for ways to address the lack of affordable housing, much more needs to be done soon to see a significant improvement over the medium term.”