Home Price Appreciation Keeps Rising
This article was originally published on RIS Media
Consumer demand coupled with low residential inventory creating one of the hottest housing markets in decades last year. It was a record-breaking year for home price growth.
According to new data from CoreLogic’s Home Price Index (HPI) and HPI Forecast for December 2021, price appreciation averaged 15%, up from the 2020 full year average of 6%. Home price appreciation began 2021 at 10% in the first quarter, steadily increasing and ending the year with an increase of 18% for the fourth quarter, according to the report.
1. Is This a Housing Market Bubble?
While there have been concerns about a housing bubble, the CoreLogic Market Risk Indicators suggest a small probability of a nationwide price decline, and points to the larger likelihood that a fall in price will be limited to specific, at-risk markets.
Nevertheless, the CoreLogic HPI Forecast shows the national 12-month growth slowing over 2022. During the early months of the year, it’s projected to remain above 10% while decelerating each month to a 12-month rise of 3.5% by December 2022. Comparing the average projected National HPI for 2022 with the previous year, the CoreLogic HPI Forecast shows the annual average up 9.6% in 2022.
YOU MIGHT WANT TO READ: 3 Predictions for the 2022 Housing Market
While there have been concerns about a housing bubble, the CoreLogic Market Risk Indicators suggest a small probability of a nationwide price decline.
2. Home Price Appreciation
- Nationally, home prices increased 18.5% in December 2021, compared to December 2020. On a month-over-month basis, home prices increased by 1.3% compared to November 2021.
- In December, annual appreciation of detached properties (19.7%) was 5.5 percentage points higher than that of attached properties (14.2%).
- Home price gains are projected to slow to a 3.5% annual increase by December 2022.
- In December, Naples, Florida, logged the highest year-over-year home price increase at 37.6%. Punta Gorda, Florida, had the second-highest ranking at 35.7%.
- At the state level, the Southern, Southwest and Mountain West regions continued to dominate the top three spots for national home price growth, with Arizona leading the way at 28.4%. Florida ranked second with a 27.1% growth and Utah followed in third place at 25.2%.
WE RECOMMEND: How climate change is leading to more equitable housing
Nationally, home prices increased 18.5% in December 2021, compared to December 2020. On a month-over-month basis, home prices increased by 1.3% compared to November 2021.
3. What It Means
“Much of what we’ve seen in the run-up of home prices over the last year has been the result of a perfect storm of supply and demand pressures,” said Dr. Frank Nothaft, chief economist at CoreLogic, in a statement. “As we move further into 2022, economic factors–such as new home building and a rise in mortgage rates—are in motion to help relieve some of this pressure and steadily temper the rapid home price acceleration seen in 2021.”
