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 Single-Family | Market Condition 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: http://www.philadelphiafed.org/research-and-data/publications/research-rap/2014/house-price-indexes.pdf
Source: CoreLogic
include(“/home/aleta/public_html/files/ad_openx.htm”); ?>
