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Joclene DaveyPrice Gains Over 7% Annually in 2016—will Hit New Peak Before End of 2017
According to CoreLogic’s just-released Home Price Index (HPI) for December 2016, prices gains slowed to 0.8% after averaging 1.3% gains over the previous 11 months. On a year-over-year basis, however, prices continued to rise. The December 2016 HPI was up 7.2% compared to the previous December and the gain over the 12-month period ending in November was 7.1%.
CoreLogic is forecasting that its index will rise by 4.7% from December 2016 to December 2017. “As of the end of 2016, the CoreLogic national index was 3.9% below the peak reached in April 2006,” stated Dr. Frank Nothaft, chief economist for CoreLogic. “We expect our national index to rise 4.7% during 2017, which would put home prices at a new nominal peak before the end of the year.” Notably, the Los Angeles / Long Beach area posted 6.8% gains last year.
In other housing news, home affordability fell to the lowest level in seven years at the end of 2016 in the face of rising mortgage rates, continued price appreciation, and moderate-income growth. It now takes 22.2% of median income to make the monthly principle and interest payment on the median-priced home, according to a new report from Black Knight Financial Services. That figure was based on borrowers using a 30-year fixed mortgage, which jumped 10% in the fourth quarter of 2016 thanks to increasing mortgage rates. As way of comparison, it took nearly 36% of the median income to afford a home during the 2005-2006 housing bubble, as both home prices and mortgage rates were higher.
