- CoreLogic estimating home prices to decline -6.6% by May 2021
- CoreLogic Home Price Index Forecast predicting prices to decline over summer due largely to “elevated unemployment rates”
Even though CoreLogic indicated that home prices increased +4.8% y/y in May, the company is predicting falling home prices throughout the summer and for home prices to decline -6.6% by the time May 2021 rolls around.
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CoreLogic’s Home Price Index Forecast emphasized, “Unlike the Great Recession, the current economic downturn is not driven by the housing market. While activity up until now (with strong demand and a tightening supply that served to prop up home prices when the COVID pandemic hit) suggests the housing market will eventually bounce back, the forecasted decline in home prices will largely be due to elevated unemployment rates.”
CoreLogic’s monthly Market Risk Indicator predicted that 125 metro areas across the country have a minimum 75% probability of home price decline by May 2021. In what CoreLogic deems as overvalued markets such as Las Vegas, prices are expected to decline 20.1% by May 2021. Other metros such as Prescott AR, Daphne-Fairhope-Foley AL and Naples and Crestview-Fort Walton Beach FL are forecasted to have an above 60% probability of home price declines.
CoreLogic’s Market Risk Indicator reported, “States likeArizona and Florida faced the perfect storm of elevated COVID-19 cases and the subsequent collapse of the spring and summer tourism market, which curtailed home-purchase demand enough to keep a lid on home price gains over the coming year.”
Frank Nothaft, CoreLogic’s chief economist, said, “By the end of summer, buying will slacken and we expect home prices will show declines in metro areas that have been especially hard hit by the recession.”
Frank Martell, president and CEO of CoreLogic, added his two cents by saying, “The next 12 to 18 months are going to be very tough times for the broader economy. As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery.”
Thanks to CoreLogic and HousingWire.