On the heels of two other home price reports this week, CoreLogic released the CoreLogic Case-Shiller Indexes for the third quarter of 2013, reporting an 11.2 percent annual price gain at the national level.
The CoreLogic Case-Shiller tracks home price movement on a quarterly basis in more than 380 metro markets across the country.
CoreLogic anticipates a substantial deceleration in home price gains this year. In fact, the firm predicts home price gains will fall just below the long-term historical norm of 4.5 percent appreciation annually, which has been maintained since 1975.
Home prices are expected to rise 4.2 percent from the third quarter of 2013 through the third quarter of 2014, according to CoreLogic.
“Double-digit price gains are unlikely to persist, but since housing is far more affordable now than it was in 2006, there is less concern that a new housing bubble will occur,” said David Stiff, principal economist for CoreLogic Case-Shiller.
Despite home price gains and rising interest rates, Stiff said as of the third quarter, the national median mortgage payment as a percentage of median family income was at a 40-year low. The ratio was 35 percent lower than it was at the height of the housing bubble, according to Stiff.
The large metro areas—those with 950,000 or more residents—with the greatest annual price gains in the third quarter were Las Vegas, Nevada (30 percent); Sacramento, California (27 percent); and Riverside, California (26 percent).
California markets made up six of the top 10 markets with the highest price gains year-over-year in the third quarter.
For example, Sacramento’s 27 percent gain reported in the third quarter will fall to a 3.8 percent gain over the following 12 months, according to CoreLogic.
The smallest price appreciation year-over-year in the third quarter took place in Philadelphia, Pennsylvania (3 percent); Hartford, Connecticut (3 percent); and New Orleans, Louisiana (3 percent).
While California and Arizona markets continued to post high price gains in the third quarter, Stiff anticipates a shift in these markets as their REO inventories dissipate and investor demand dissolves along with it.
“Investor demand and sales of foreclosed properties are dropping quickly,” Stiff said.
“Non-investor demand, although increasing, will not replace demand from investors,” he said.
Looking ahead, CoreLogic anticipates the greatest price appreciation occurring through the third quarter of this year in Oakland, California (9 percent); New Orleans, Louisiana (9 percent); and Fort Worth, Texas (9 percent).
The smallest gains are expected in the Southern markets of Nashville, Tennessee (2 percent); Orlando, Florida (3 percent); and Jacksonville, Florida (3 percent).