Rising Home Prices and Rents Squeeze Consumers: CoreLogic Report
Ralph McLaughlin
HOUSTON – (By Dale King, Realty News Report) – Home prices across the United States continued to rise, but at a slower pace than in recent years, according to the March 2019 Home Price Report from CoreLogic, a global provider of property information, analytics and data-enabled solutions.
That slower growth may disappoint prospective buyers, but it poses an even greater challenge for renters who say rising prices are keeping them from entering the housing market.
CoreLogic’s Home Price Index (HPI) and HPI Forecast for March 2019 show home prices increased both year-over-year and month-over-month. Nationally, prices rose 3.7% from March 2018 to March 2019. Month-over-month, prices edged up 1% from February 2019 to March 2019.
In the Houston market—covering Houston, The Woodlands and Sugar Land—home prices increased 3.5% year-over-year from March 2018 to March 2019. The statewide figure for Texas was 3.4% for the same period.
Some markets showed much larger gains. Las Vegas led with an 8% increase over the prior 12 months, a pace that prompted CoreLogic to classify the metro as “overvalued.” The report also labeled Denver (4.1%), the Houston area, the Miami-Kendall area and the Washington, D.C. region (both 3%) as overvalued.
By contrast, price growth in Boston, Los Angeles and Chicago was deemed “normal,” with year-over-year gains in the low to high 2% range.
CoreLogic’s analysis notes that rising home prices are creating obstacles for renters trying to transition to homeownership.
During the first quarter of 2019, CoreLogic and RTi Research of Norwalk, Connecticut, surveyed consumer housing sentiment in high-priced markets. Respondents reported that high home values are pushing rents up as well. Nearly 76% of renters and buyers in expensive markets agreed that rising housing prices are driving rental rates higher, increasing their rent and making it harder to save for a home.
“The cost of either buying or renting in expensive markets puts a significant strain on most consumers,” said Frank Martell, president and CEO of CoreLogic. “Nearly half of survey respondents—44% of renters—cited the cost to rent in high-priced housing markets as the number one barrier to entering homeownership. This is potentially forcing renters to wait longer to accumulate the necessary down payment in these communities.”
A chart in the March 2019 Home Price Report summarized renters’ responses as follows:
44% said they cannot afford a down payment.
43% said they “can’t afford a home.”
40% said there are “no affordable homes where I want to live.”
35% said, “My current living situation meets my needs.”
17% said, “I would not qualify for a mortgage.”
14% said they “like the mobility that renting gives me.”
CoreLogic’s forecast expects some fluctuation in the rate of home-price growth before conditions stabilize. The report projects that after an initial moderation in early 2019, the HPI will pick up and increase by 4.8% year-over-year from March 2019 to March 2020. Month-to-month, prices were expected to dip 0.3% from March 2019 to April 2019.
“The U.S. housing market continues to cool, primarily due to some of our priciest markets moving into frigid waters,” said Ralph McLaughlin, deputy chief economist at CoreLogic. “But the broader market looks more temperate as supply and demand come into balance. With mortgage rates flat and inventory picking up, we expect more buyers to take advantage of easing housing market headwinds.”
