CoreLogic’s February Home Price Index
(HPI) essentially echoed that the price report last week from Black Knight. The
company said that its index recorded its highest annual growth since 2006 at
10.4 percent.
Demand continues to clash with an historically low supply
creating affordability challenges, especially as mortgage rates also begin to
rise. The HPI increased 1.2 percent on a month-over-month basis.

Those challenges have begun to push
homebuyers away from high-cost metro areas as the spring homebuying season
looms. The number of
homebuyers in the top 10 metros with the largest net out-migration – including
West Coast metros like Los Angeles, San Francisco, and San Jose – who
chose to move to another metro
increased to 21 percent in 2020, up 3 percentage points from 2019. This sentiment is reflected in CoreLogic’s recent
consumer survey, which found that 57 percent of current non-homeowners on the
West Coast feel the home options in their area are not at all affordable.

 “Homebuyers are experiencing the most
competitive housing market we’ve seen since the Great Recession,” said Frank
Martell, president, and CEO of CoreLogic. “Rising mortgage rates and severe
supply constraints are pushing already-overheated home prices out of reach
for
some prospective buyers, especially in more expensive metro areas. As
affordability challenges persist, we may see more potential homebuyers priced
out of the market and a possible slowing of price growth on the horizon.”

Those metro areas where the affordability
constraints continue to be prevalent have had the largest increases.  For instance, in February, home prices increased
16.2 percent year over year in Phoenix, 12.5 percent in Seattle and 8.2 percent
in Los Angeles.  At the state level, Idaho, Montana, and South Dakota had
the strongest price growth in February, up 22.6 percent, 19.5 percent, and 17.1
percent, respectively.

“The run-up in home
prices is good news for current homeowners but sobering for prospective
buyers,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Those looking
to buy need to save for a down payment, closing costs and cash reserves, all of
which are much higher as home prices go up. Add to that a rise in mortgage
rates and the affordability challenge for first-time buyers becomes even
greater.”

CoreLogic forecasts an increase of 3.2 percent
in home prices over the 12 months ending in February 2022. Increased inventory as the pandemic wanes, coupled
with affordability concerns that may discourage potential homebuyers, could
lead to a slowdown in home price growth by the end of this yea
r.

By Jann Swanson , dated 2021-04-06 10:46:05

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Courtesy of Mortgage News Daily

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