US Home Price Predictions
As we leave the Corona Virus shutdown period, we’re turning our attention to house price predictions and whether other buyers hot in the pursuit of homes for sale.
Most people want to see some home price forecasts to time their purchase or sale. Are there going to be particular months where they can pull the buy or sell trigger? Corelogic is of the opinion that prices will climb in the next 3 months, then drop for perhaps the next 6 to 12 months.
The last few months have a lot of Americans (and Canadians, Brits and Aussies) pondering their work and personal lives. There is so much uncertainty clouding housing demand and the economic forecast. Americans are facing new questions about work, home buying, financing, safety, and opportunity.
Whether it’s resale homes or new homes, the economy is reawakening with fits and starts due to the pandemic. Economists and stock market analysts talk about a V shaped recovery. Both resale and new home inventory is low, especially product in the starter home price category.
Demand and Liquidity Should Spur Home Buying
Improving economy + low inventory + first time buyer growth + low mortgage rates has to spell home price increases. Sales of resale homes were still down in May yet sales volume is increasing. Many sellers are hesitant to sell right now with nowhere to go. Buyers will have to pay more to get them to part with their precious property.
Prices were flat or rising slightly, and this is still a depressed economy with shutdowns continuing in effect.
There will be second wave of Covid 19 and it will make its effects felt, like it did recently on the Dow, S&P and NASDAQ today. Yet buyers show an enthusiasm and demand for moving into roomier, more rural location. Experts are underestimating this. See more on all housing markets including Florida and California on the US Housing report.
Prices During May
Fastest home price appreciation in Philadelphia, San Jose, and Nashville.
Case Shiller Price Forecasts
Case Shiller offers a negative outlook for home prices. They believe home prices will lift a little in June/July/August and then head downward.
This chart depicts a fairly decided downward trend.
There is a big migration out of the cities to the burbs and smaller towns. This is likely to take some of the pressure off of apartments, condos and other high density housing. Yet, single family and other lower density homes should still draw buyers.
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In the burbs and outlying towns, particularly in the midwest, we could see bidding wars.
As you can see, home prices in the major metros were doing well. These are price growth numbers from the last 12 months including the last very difficult three months.
The Migration out of Cities
People are becoming more mobile as high home costs push them out of congested, high priced urban areas to more affordable regions. The new work at home mandate means workers don’t have to be chained to their employer’s physical office location. And employers too may abandon urban sites for new locations in America’s heartland. They’re looking for the best cities to buy real estate.
Case Shiller Home Price History Chart
The housing experts need to take another look at this chart. Even through the worst mini-recession ever, home prices keep rising. This upward direction shows no quit.
Home prices have been on the rise in May too. NAR reported a 3.1% rise just in the last two weeks of May. We’ll have to wait for the full set of sales and home price report out in a few weeks.
House prices rose 5.4% in April, up from 4.5% rise in March. Clearly, the trend is upward and as home buyers slowly go back to work, the price pressure will rise.
Is this the best time to buy a home? Will buyers get a break later on in 2020 if they wait? Is this a buyers market? It just may be the right time as the forecast is a return of price growth after the current slowdown.
Can you assess a housing market without looking at:
- economic predictions,
- consumer confidence
- wages and employment
- GDP and trade deficits
- work at home trends
- fears of disease in high density regions, going forward
- stock market predictions?
Check the health and predictions for major cities: Los Angeles, New York, Seattle, Chicago, Philadelphia, San Diego, Miami, Boston, Bay Area, Sacramento, and Atlanta. See forecasts for California housing and Florida housing markets.
Reuters polled a number of housing market analysts at the end of a weak month in home sales, and this is still what they believe going forward to 2021:
A look back at how right they were about home price rises. With the cessation of the Corona Virus, the demand for homes will resume.
This reuters poll reflects the belief in rising home prices.
Freddie Mac Forecast
Freddie Mac points to higher mortgage rates until they throttle the economy in 2020. If the economic forecast is dire, then interest rates would fall. Higher rates would serve to raise home prices, if the economy hangs in there.
Forisk forecasts solid levels of home construction peaking in 2023 and sustained to 2027, although tailing due to satiated demand and rising interest rates.
And from a reuters news report on the economy, Joel Naroff, chief economist at Naroff Economic Advisers is quoted as saying, “Everything seems to be moving in the right direction in the economy … The weak links are recovering and the strengths are staying strong. The Fed is not going to continue doing nothing.” That would mean he expects the Fed to raise interest rates, and that would push the US dollar to further highs.
Best Cities to Invest?
Cross reference this compiled list of cities with a previous post on best cities to buy property.
For rental income, Silicon Valley, Los Angeles, Dallas, San Diego, and Boston might be best picks. It might be a case of the usual suspects, but start here, work your way to the best zip codes and neighborhoods, types of house, employment growth, and migration patterns of Millennials, and you may have yourself a winner (real estate investment). Who knows which cities will rule after 4 years of the Trump overhaul of the US government and US economy?
Top Home Price Growth Trends
Price growth varies each quarter. These are the latest prices from Kiplinger. California cities come in as the least affordable in the nation. New York, Washington DC, Honolulu, and Seattle are right up there.
|Rank||City (updated Jan 2019)||Price Rise over last year||Sales Growth||Average Home Price 2015 – Kiplinger|
|1||San Francisco-Oakland-Hayward, CA||8.41%||1.17%||$750,000|
|2||San Jose-Sunnyvale-Santa Clara, CA||8.26%||1.26%||$1,000,000|
|5||Los Angeles-Long Beach-Anaheim, CA||6.90%||6.03%||$605,000|
|6||Salt Lake City, UT||6.66%||4.67%||$301,000|
|8||San Diego County, CA||6.47%||4.89%||$530,000|
|10||Providence-RI Warwick, MA||6.31%||4.09%||$246,000|
|15||Atlanta-Sandy Springs-Roswell, GA||5.93%||2.67%||$190,000|
|16||Grand Rapids-Wyoming, MI||5.77%||4.16%||$155,000|
|19||Greensboro-High Point, NC||5.50%||3.56%||$118,000|
|21||Oxnard-Thousand Oaks-Ventura, CA||5.19%||5.35%||$565,000|
|25||Las Vegas-Henderson-Paradise, NV||5.06%||4.57%||$240,000|
|28||Riverside-San Bernardino-Ontario, CA||4.98%||6.88%||$276,000|
|32||Tampa-St. Petes, FL||4.84%||5.10%||$176,000|
|33||Palm Bay-Melbourne-Titusville, FL||4.83%||3.14%||$160,000|
|36||Boise City, ID||4.79%||5.28%||$215,000|
|37||Colorado Springs, CO||4.77%||6.71%||$260,000|
|44||Lakeland-Winter Haven, FL||4.64%||4.89%||$146,000|
|47||New Haven-Milford, CT||4.39%||2.60%||$117,000|
|48||Kansas City, MO KS||4.36%||2.66%|
|50||Augusta-Richmond County, GA||4.28%||4.62%||$147,000|
|55||Dallas-Fort Worth-Arlington, TX||4.13%||5.09%||$182,000|
|56||Minneapolis-St Paul, MN||4.08%||3.56%||$235,000|
|57||Oklahoma City, OK||4.07%||4.18%||$155,000|
|59||New York-Newark-Jersey City, NY N.J Pa.||3.99%||6.48%||$425,000|
|60||Miami-Fort Lauderdale-West Palm Beach, Fla.||3.98%||4.17%||$240,000|
|61||New Orleans-Metairie, LA||3.95%||5.94%||$190,000|
|63||El Paso, TX||3.93%||2.85%|
|64||Washington-Arlington-Alexandria, DC VA||3.92%||4.60%||$375,000|
|75||Austin-Round Rock, TX||3.50%||7.40%||$251,000|
|76||St. Louis, Mo||3.46%||4.35%||$155,000|
|80||Buffalo- Niagara Falls, NY||3.36%||2.08%||$125,000|
|81||San Antonio-New Braunfels, TX||3.29%||6.22%||$170,000|
|86||Deltona-Daytona Beach, FL||3.10%||8.23%||$170,000|
|89||Little Rock, AK||2.97%||3.59%||$140,000|
|91||Des Moines, IA||2.92%||4.32%||$173,000|
|92||Cape Coral-Fort Myers, FL||2.91%||5.41%||$200,000|
|93||Baton Rouge, LA||2.87%||5.53%||$166,000|
|95||Durham-Chapel Hill, NC||2.55%||8.95%||$220,000|
|Chart Data courtesy of Realtor.com and Kiplinger.com|
US Real Estate Market to 2021
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