According to the latest S&P CoreLogic Case-Shiller National Home Price NSA Index, existing home prices in February 2018 rose +6.3% from February 2017. Month over month, existing home prices rose +0.4%.
This is the 70th consecutive month that existing home prices have risen. Some people, whispering under their breaths, are beginning to worry that such price increases are looking and feeling too much like the 15 years of existing home price increases that led up to the financial crisis 10 years ago.
David Blitzer, managing director and chairman of the index committee for the S&P Dow Jones Indices, however, is not one of those people whispering or worrying for three primary reasons. One, price increases are occurring at variable rates across the country. Two, there are many fewer homes being sold today than were being sold in the run-up to the housing crisis. And three, loan underwriting is much stricter today than it was between 1997-2007.
Here’s what Blitzer did have to say. “Year over year prices measured by the national index have increased continuously for the past 70 months, since May 2012. Over this time, price increases averaged 6% per year.”
The cities showing the biggest increases in home prices also had the largest employment gains in February 2018. Seattle came in #1 with an existing home price increase of +12.7%; Las Vegas came in second at +11.6% and San Francisco came in third at +10.1%. Thirteen of the twenty cities analyzed by the Index reported increases from 1/2018 to 2/2018.
San Francisco, Los Angeles and Miami were outliers in terms of CoreLogic’s given correlation between employment gains and existing home price increases. Miami had smaller home price increases despite having better than average employment gains. San Francisco and Los Angeles ranked higher than anticipated despite having lower than average employment gains. Apparently, California as a whole continues to be the golden state.
Lawrence Yun, the chief economist with the National Association of REALTORS (NAR), ever concerned about lack of inventory and the first-time buyer crunch, continues to encourage more new home construction, particularly construction of smaller sized, entry level homes and condos.
Yun said, “There is no let up to rising home prices. The Case-Shiller Index and NAR median home price both show gains of roughly double the average wage growth. Even as the tightening job market is starting to boost incomes, those looking to buy are facing a double whammy of fast rising home prices and higher mortgage rates.”