The latest CoreLogic Home Price Index (HPI) tells us national home prices rose +3.7% in November 2019. CoreLogic also anticipates that home prices will increase +5.3% from November 2019 through November 2020.
The real story, in our view, is what is happening within the price tiers of the market. In analyzing individual home price tiers relative to median national home sale prices, CoreLogic found that price growth breakdowns within the total market looked like this in November 2019:
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- Lowest tier – +5.6%
- Low-mid tier – +4.8%
- Mid-moderate tier – +4.2%
- Highest tier – +3.4%
Since 2011, home sales prices by tiers have increased…
- Lowest tier – +97.3%
- Low-mid tier – +77.5%
- Mid-moderate tier – +65.8%
- Highest tier – +49.3%
With these percentages, it’s no wonder that new construction builders focus on building luxury homes or that investors invest in the lowest tier of the market to get the biggest bang for their bucks.
While national home sale prices increased in November 2019, here are the states with the highest and lowest y/y price changes in CoreLogic’s HPI:
States with the Highest Y/Y Changes in Home Sale Prices
West Virginia +6.5%
States with the Lowest Y/Y Changes in Home Sale Prices
New York +1.6%
While 39 states experienced slowing home sale prices, Nevada home sale prices plummeted from +11% in November 2018 to a -7.8% slowdown of +3.2% in November 2019.
Luxury home sale prices sank in Southern Florida and New York City. Despite New Yorkers flocking towards luxury markets in Florida if they can sell their luxury New York residences and still come out ahead, those former New Yorkers are becoming renters, not buyers, in Florida’s luxury markets.
Owners in NYC’s Manhattan saw their average sale prices drop a resounding -7.5% in Q4 2019. Falling from an average sale price of $1.8M to a median sales price below $1M, these ex-New Yorkers do not want to experience such price drops again.
And, the higher the sale prices, the steeper the drops. Apartments priced +$5M fell a whopping -38% in Q4 2019 and left behind a two-year supply of luxury units on the market.
Jonathan Miller, president and CEO of Miller Samuel, told CNBC, “I think we’ll see more of the same. The problem of saying that 2020 will mark the bottom is that (such words and forecasts) suggest that it (the market) will go up after that. And I think we still have another couple of years of moving sideways price-wise.”
Thanks to CNBC, The RealDeal and CoreLogic for source data and material.