No Let-Up: 2020 Home Price Appreciation Outpaces 2019 by 50%
The U.S. housing market exceeded expectations in 2020, pricewise, said CoreLogic, Irvine, Calif., closing out the year with the highest annual home price gain—9.2%—since February 2014.
The company’s monthly Home Price Index and HPI Forecast noted despite a blip in April, home-purchase demand surged as record-low mortgage rates persuaded first-time homebuyers to enter the market. Meanwhile, the consequences of the pandemic were seen in the dwindling supply of homes — dropping, on average, 24% below 2019 levels — as homeowners delayed selling.
These factors translated to significant home price growth in 2020, surpassing the previous year’s levels with an average monthly year-over-year gain of 5.7%, compared to 3.8% in 2019. Other findings:
–On a month-over-month basis, home prices increased by 1% from November.
–December gains across all of the 10 select metropolitan areas surpassed their December 2019 levels.
–Affordability concerns continue to persist as prices continue to steeply rise. In San Diego, prices increased 10.4% year over year in December compared to 3% in December 2019. San Diego home prices are also forecasted to increase an additional 8.2% over the next 12 months.
–At the state level, Idaho, Indiana and Maine had the strongest price growth in December, up 19.1%, 16.1% and 15.2%, respectively.
CoreLogic Chief Economist Frank Nothaft said the severe shortage of for-sale homes could cause rising affordability concerns and some prospective buyers priced out of the market in 2021.
“Two record lows are fueling home price gains: for-sale inventory and mortgage rates,” Nothaft said. “Prospective sellers with flexible timetables have opted to delay listing their home until the pandemic fades or they are vaccinated. We can expect more inventory to come available in the second half of the year, leading to slowing in price growth toward year-end.”
“At the start of the pandemic, many braced for a Great Recession-era collapse of the housing market,” said Frank Martell, president and CEO of CoreLogic. “However, market conditions leading into the crisis — namely low home supply, desire for more space and millennial demand — amplified the rapid acceleration of home prices.”