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posted on 07 November 2017

September 2017 CoreLogic Home Prices Reveal Nearly Half of the Nation's Largest 50 Markets are Overvalued

Written by Steven Hansen

CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 7.0 % year-over-year year-over-year (reported up 0.9 % month-over-month). CoreLogic HPI is used in the Federal Reserves' Flow of Funds to calculate the values of residential real estate.

Analyst Opinion of CoreLogic's HPI

CoreLogic year-over-year rate of growth has been steady for three years - with a higher number issued initially and later downwardly revised in the following months. This month they included the following table which speaks for itself:

Home Price Change and Market Conditions for Select Metropolitan Areas

Select Metropolitan Areas September 2017 12-Month
HPI Change
Year Over Year
as of
September 2017
Las Vegas-Henderson-Paradise NV 9.7% Overvalued
Denver-Aurora-Lakewood CO 8.4% Overvalued
Los Angeles-Long Beach-Glendale CA 7.1% Overvalued
Boston MA 7.0% At value
San Francisco-Redwood City-South San Francisco CA 6.4% At value
Miami-Miami Beach-Kendall FL 5.5% Overvalued
Washington-Arlington-Alexandria DC-VA-MD-WV 4.6% Overvalued
New York-Jersey City-White Plains NY-NJ 4.5% Overvalued
Chicago-Naperville-Arlington Heights IL 4.0% At value
Houston-The Woodlands-Sugar Land TX 3.3% Overvalued

Source: CoreLogic September 2017

Dr Frank Nothaft, chief economist for CoreLogic stated:

Heading into the fall, home price growth continues to grow at a brisk pace. This appreciation reflects the low for-sale inventory that is holding back sales and pushing up prices. The CoreLogic Single-Family Rent Index rose about 3 percent over the last year, less than half the rise in the national Home Price Index.

z corelogic2.PNG

Frank Martell, president and CEO of CoreLogic stated:

A strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand for residential real estate. While demand and home price growth is in a sweet spot, a third of metropolitan markets are overvalued and this will become more of an issue if prices continue to rise next year as we anticipate.

Comparison of Home Price Indices - Case-Shiller 3 Month Average (blue line, left axis), CoreLogic (green line, left axis) and National Association of Realtors (red line, right axis)

z existing3.PNG

The way to understand the dynamics of home prices is to watch the direction of the rate of change - and not necessarily whether the prices are getting better or worse. Home price rate of growth is now marginally improving.

Year-over-Year Price Change Home Price Indices - Case-Shiller 3 Month Average (blue bar), CoreLogic (yellow bar) and National Association of Realtors (red bar)

z existing5.PNG

Caveats Relating to Home Price Indices

There is no such thing as an "accurate" home price index. CoreLogic HPI is a repeat sales type index which should not be skewed by changes in the mix of home sales. For more information, please read:

Source: CoreLogic

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