CoreLogic reported that whole prices on a national basis increased 5.4% in April year-over-year. The price increase is considered to be again the combination of a number of factors: the extreme crisis in inventory shortages, low mortgage rates and finally pent-up demand primarily coming from first-time buyers of the millennial generation.
Conversely, CoreLogic is also forecasting that home prices will decrease by 1.3% nationally by this time next year. This does not track with the continued year-over-year inventory shortages and low interest rates that have been made available. Buyers have been renting for years and now are looking to dip their toe into the market.
CoreLogic is concerned over the impact of the economic downturn due to the COVID-19 pandemic and general weakness of the economy. This is not the first time that CoreLogic has forecasted a drop in home prices. Back at about the same time last year, CoreLogic saw that 40% of the housing market was overpriced. “…looking at only the top 50 markets based on housing stock, 40% were overvalued, 16% were undervalued and 44% were at value in March 2019.”
Additionally, many of the potential buyers who work in densely populated urban areas such as New York and Los Angeles may continue to work from home.
Conversely, smaller cities, such as Philadelphia, have seen strong growth in home values. New York, as a real estate market, has for the last year-and-a-half shown definite areas of weakness.
New Jersey adjacent counties bordering Philadelphia reflected the benefit of that city’s spike in value. Burlington County reported in April that median sales price for a single-family home jumped 12.8% to $265,000. In addition, the inventory shortage in Burlington County has driven the months supply of inventory down to 2.9 month, a 38.3% drop year of the year.
Gloucester County reported even stronger sales for single-family homes, with the median sales price for a single-family house climbing 17.1% to $223,000. In addition, inventory fell to a 2.3 months supply, which is a 49% drop year-over-year.
Still, the number of workers that will continue to work from home will have an impact upon real estate values especially in the high density population regions.