Home prices were up by close to 7% in July, and are considered to be overvalued in many top U.S. cities, according to the latest CoreLogic US Home Price Report. CoreLogic is a leading global property information, analytics and data-enabled solutions provider.
The new report, based on data from July 2017, showed home prices were up slightly by 0.9% nationally from June, but by 6.7% over last July. They are expected to continue to rise in the upcoming year, by another 5% by July of 2018.
“Home prices in July continued to rise at a solid pace with no signs of slowing down,” said Frank Martell, president and CEO of CoreLogic. “The combination of steadily rising purchase demand along with very tight inventory of unsold homes should keep upward pressure on home prices for the remainder of this year. While mortgage interest rates remain low, affordability cracks are emerging as over a third of U.S. top cities are now overvalued.”
The Western and Mountain states led price growth in the nation, some seeing double-digit growth since last year.
“In July, home price growth in the Pacific Northwest and mountain states led the nation with the highest appreciation rates,” said Dr. Frank Nothaft, CoreLogic’s chief economist. “The sharp increase in prices in Washington and Utah has been especially striking, with home price growth in both states accelerating by 3 percentage points since the beginning of this year.”
Based on housing stock in the 100 largest metropolitan areas, 34% were deemed overvalued, 28% undervalued, and 38% at value, based on the CoreLogic Market Conditions Indicators (MCI) data.
However, when looking only at the top 50 markets, almost half—46%–were considered to be overvalued. The MCI defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level.
The MCI analysis categorizes home prices as undervalued, overvalued or at value in individual markets by comparing the prices to their long-run, sustainable levels, which are supported by local market fundamentals like disposable income.
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