Home Prices Surge While Negative Equity Shrinks
March 7, 2017
January’s home prices increased by 6.9 percent on a year-over-year basis, according to new data from CoreLogic. On a month-over-month basis, home prices were up 0.7 percent.
Among the states, Washington had the greatest year-over-year price appreciation, with 10.8 percent, followed by Oregon with a 10.2 percent increase. Maine was the sole state to see price depreciation in January, dropping 1.8 percent.
CoreLogic is forecasting a 4.8 percent year-over-year increase in prices from January 2017 to January 2018, and a scant 0.1 percent uptick from January 2017 to February 2017.
“Home prices continue to climb across the nation, and the spring home buying season is shaping up to be one of the strongest in recent memory,” said Frank Martell, president and CEO of CoreLogic. “A potent mix of progressive economic recovery, demographics, tight housing stocks and continued low mortgage rates are expected to support this robust market outlook for the foreseeable future. We expect the CoreLogic Home Price Index to rise 4.8 percent nationally over the next 12 months, buoyed by lack of supply and continued high demand.”
While home prices continue to rise, negative equity rates are dropping. According to new data from Zillow, 10.5 percent of mortgaged homeowners owed more than the value of their homes by the end of 2016. One year earlier, that level was 13.1 percent. Las Vegas and Chicago had the highest negative equity levels among the major housing metro markets, with 16.6 and 16.5 percent of homeowners underwater, respectively.
"Negative equity is one of the most persistent reminders of the long-term losses suffered when the housing market collapsed," said Zillow Chief Economist Svenja Gudell. "Accelerating home value appreciation over the past few months was a blessing to owners who have been underwater since the housing bubble burst, but not all underwater owners were able to ride that wave to positive equity. We are in for many more years of elevated levels of negative equity. Even as median home values close in on peak levels reached during the housing boom, some people still face a long wait before returning to a positive balance on their home loans."
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