More home appreciation is likely to come in the new year. In a new report released by CoreLogic, economists predict home prices will spike by 5.4% from October 2019 to October 2020. That is even higher than the 3.5% annual appreciation in national home prices posted this October, the real estate data firm notes.
Nationally, over the past year, home prices are up 3.5% with the rate of growth accelerating from September into October, says Frank Martell, president and CEO of CoreLogic. “We expect home prices to rise at least another 5% over the next 12 months,” Martell says. “Interestingly, this persistent increase in home prices isn’t deterring older millennials. In fact, 25% of those surveyed anticipate purchasing a home over the next six to eight months.”
The CoreLogic Home Price Index is a projection of home prices that is calculated using a variety of economic variables and state-level forecasts.
“Local home-price growth can deviate widely from the change in our U.S. index,” says Frank Nothaft, CoreLogic’s chief economist. “While we saw prices up 3.5% nationally last year, home prices also declined in 22 metropolitan areas. Price softness occurred in some high-cost urban areas and in metros with weak employment growth during the past year.” All 50 states, however, posted annual increase in home prices.
CoreLogic’s report warns that home prices may be getting too hot in some locales. Among the nation’s largest metro areas, 35% are considered being “overvalued” as of October 2019, CoreLogic reports. Researchers define overvalued as markets where home prices are at least 10% above the long-term sustainable level. On the other hand, 27% of the top 100 metro markets were undervalued, and 38% were considered at value.
Idaho saw the highest home price increases, far exceeding any other states in appreciation in October, the report notes. The state posted an annual appreciation of 10.9% in October.