Home prices are projected to increase by 5.3 percent by April 2019, according to the latest CoreLogic Home Price Index that was released on Tuesday. Nationally, CoreLogic said that prices increased by 6.9 percent year over year in April and by 1.2 percent on a month-over-month basis. But are more markets becoming overvalued?
Despite the potential impact of Hurricane Irma last year, the report indicated that home prices in Florida continued to surge, increasing 5.8 percent year over year and by 0.6 percent on a month-over-month basis. By April 2019, CoreLogic estimates prices in the Sunshine State to increase by 7.5 percent year over year and 0.8 percent on a month-over-month basis.
“Florida continues to show price resiliency after Hurricane Irma in 2017,” said Frank Martell, President, and CEO, CoreLogic. He said that home prices in Florida would continue their gains through the remainder of the year, but they were likely to be impacted if a significant storm made landfall again.
In fact, all 50 states across the U.S. gained value year over year in April according to the report. An analysis of housing values in the country 100 largest metropolitan areas based on housing stock found that 40 percent of metropolitan areas were overvalued in April.
When looking at the top 50 cities, the report found that 52 percent markets were overvalued, 14 percent were undervalued, and 34 percent of the markets were at value. Washington led the surge in home prices with an increase of 12.8 percent. Idaho (12.4 percent); Nevada (12.2 percent); and Utah (11.5 percent) also experienced double-digit increases in home prices.
When it came to the top metropolitan areas, the report noted that San Francisco and Las Vegas experienced the largest year over year change in prices at 12.3 percent. Chicago and Washington, D.C. reported the smallest gains at 3.1 percent and 2.5 percent respectively.
One of the reasons for the surge, according to Dr. Frank Nothaft, Chief Economist, CoreLogic, is the failure of new construction to keep up with demand and replace existing inventory. “The best antidote for rising home prices is additional supply,” he said. “More construction of for-sale and rental housing will alleviate housing cost pressures.”