Even after a year of extremely high home price growth, June’s numbers broke all possible records. According to the latest numbers from property analytics provider CoreLogic, home prices rose 17.2 percent annually in June — the highest growth observed at any point since the late 1970s.
Such a high number (the 2.3 percent observed from May to June alone can equals annual growth in other years) reflects supply and demand pressures observed throughout the pandemic.
Low inventory coupled with historically low mortgage rates mean that far more people want to buy a home than what is actually available on the market. All-cash offers and bidding wars are being observed in cities where they were previously unheard of.
“Home prices have been rising in the mid-single digits for some years now. The recent surge to double-digit price jumps reflects the convergence of exceptional demand and persistent low supply,” Frank Martell, president and CEO of CoreLogic, said in a prepared statement. “With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up and affordability will become a more acute issue for the foreseeable future.”
Such high growth is stalling the market for both sellers and buyers, as even those who sell a home are often unable to find a new one that they can afford. First-time buyers without significant savings or family help for a down payment are in a particularly challenging situation.
At 19.1 percent growth, detached properties appreciated far faster than attached properties at 10.7 percent. The highest growth was in Twin Falls, Idaho, at 40.2 percent with Bend, Oregon, following close behind at 35.4 percent. Idaho and Arizona were the two states with the highest increases at 34.2 and 26.1 percent, respectively.
CoreLogic predicts that, as the low number of listings prevent many from buying and the market stalls, growth will also take a hit in the near future. Unlike with past bubbles, values are not expected to decrease but a slowdown is on the horizon — an increase of only 3.2 percent is predicted across the country by June 2022.
“The pandemic sparked an increase in buyer desire for lower density neighborhoods and more living space — both inside and outside their home,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a prepared statement. “Communities with single-family detached houses fill this need. Detached homes had the highest annual growth in June since the inception of the CoreLogic Home Price Index in 1976.”