For real estate agents and brokers, 2018 promises to be an interesting year, with home prices poised to rise during the coming year amid news that sales prices increased 7 percent annually in a report from CoreLogic.
To compliment that survey, low supply and high demand continue to fuel gains and neither trend is likely to ease up in the near future.
According to a CNBC report, November marked the third consecutive month during which sales hit such a stride, much more than price gains during the first half of 2017. To top that off, supply is dwindling and the economic trends seen over the last two years are continuing, pushing consumer confidence and driving demand.
Supply is actually falling even more now, and a strengthening economy is pushing demand. This will have potential buyers out early this year, trying to get a jump on the spring market.
Frank Nothaft, chief economist at CoreLogic, said the limited supply is the worst at the lower end, and will hit the growing number of first-time buyers hardest.
“Rising home prices are good news for home sellers, but add to the challenges that home buyers face. 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.”
The largest metropolitan areas are seeing the biggest gains.
In the nation’s top 50 markets, half of the housing stock is now considered overvalued, based on market fundamentals, like income and employment. CoreLogic defines an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level.
Las Vegas led the November report as not only being overvalued, but showing a double-digit annual price gain of 11 percent. San Francisco was not far behind at 9 percent, and Denver came in third at 8 percent.
Las Vegas and Denver are both considered overvalued, but San Francisco is not, as incomes in the tech capital far exceed the national level.
How much home prices rise in 2018 is primed for debate.
Home price increases are expected to slow into 2018 as the CoreLogic HPI Forecast shows home prices will increase by just 4.2 percent from November 2017 to November 2018.
Monthly, home prices are predicted to decrease 0.4 percent from November to December.
CoreLogic President and CEO Frank Martell said in 2018 it will take a significant spike in home construction to boost supply. Otherwise, prices will remain high and likely move higher.
“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. 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.”
Other issues include mortgage rates that edge slightly higher and new tax policy limiting mortgage and property tax deductions, is hitting homeowners in some states hard.