CoreLogic’s national Home Price Index (HPI) informs us that the share of homes selling at or above listing prices in March 2019 had returned to early 2000 levels. Nationally, the share of homes sold at or above respective list prices was 31.1%.
Naturally, some cities had higher and lower percentages for selling homes at or above listing prices.. Cities with the highest percentage of homes selling at or above list prices included:
- San Francisco – 69%
- Washington DC – 50%
- Minneapolis and Seattle – 48%
Cities with the lowest percentage of homes selling above list prices included Miami at 14% and Chicago at 21%.
Price pressures begin to increase substantially when housing supply drops below 3 months. In San Francisco, supply dropped to 2.3 months. In Miami, supply came in at 11 months and buyers saved at an average discount of 7.8%.
Research by Black Knight corroborates CoreLogic’s findings when looking at data from the viewpoint of the annual rate of price appreciation, which, in March 2019, fell to a 7-year low. There was only a +1% increase in home price appreciation from March 2018. (With only a +1% price appreciation in one year, no wonder buyers were able to “afford” to negotiate “up” in order to “win” the house they wanted.”
2019’s slight increase in home appreciation pushed annual appreciation rates to 3.8%, also a 7-year low. According to Black Knight’s Ben Graboske, “…the annual rate of appreciation has now slipped to 3.8%, the first time annual home price growth has fallen below the 25- year average of 3.9% since 2012.”
CoreLogic estimates, however, that home prices are likely to increase 4.1% y/y from April 2019 to April 2020. CoreLogic’s estimated forecast for the next year is higher than forecasts from the Mortgage Banking Association (4.2% appreciation), Fannie Mae’s forecast of a 4.0% price appreciation and NAR’s forecasted 2.9% price appreciation y/y.
CoreLogic’s forecast from chief economist Frank Nothaft is based on a drop in mortgage rates and an increase in household income. Though just a 3.5% higher median household income over nearly two decades, Gordon Green of Sentier Research indicated that the overall trend line pertaining to household income has “…been positive for about seven years.”