Morning Briefing: Home prices picking up pace

Home prices picking up pace

Home prices were up 7 per cent in the year to February 2017, the latest CoreLogic HPI reveals.

The data shows a 1 per cent rise month-over-month from January as demand increased while supply remained subdued. Frank Martell, CoreLogic president and CEO says that despite higher interest rates, price appreciation is set to continue.

“Home prices are at peak levels in many major markets and the appreciation is being driven by a number of dynamics—high demand, stronger employment, lean supplies and affordability—that will continue to play out in the coming years,” Martell said. “The CoreLogic Home Price Index is projecting an additional 5 per cent rise in home prices nationally over the next 12 months.”

An extra bedroom increases mortgage by 50 per cent

Moving house to gain an extra bedroom can increase mortgage payments by as much as 50 per cent, Zillow research shows.

Going from a 2-bedroom to a 3-bedroom home means an increase nationally of $447 per month for mortgage payments; in some coastal markets it could mean an extra $500 and in the hottest markets homebuyers could need an extra $1,600 a month!

Chicago, Cincinnati and St. Louis are kinder on the budgets of growing households with an extra bedroom adding just $150 to monthly mortgage costs. Cleveland has the lowest additional cost though at $74.

Appraisers reluctant to do VA program work survey reveals

Home appraisal professionals are finding it harder to work with the VA Home Loan Guaranty Program due to compensation levels.

The National Association of Realtors recently published the results of its appraisers’ survey which shows a reluctance to work with the VA system and the barriers to becoming an appraiser is dissuading trainees.

"America's veterans have been well-served for years by VA's appraisal system, and professionals in the business should be proud of their good work," Michelle Bradley, a state-certified general real property appraiser from Pennsylvania. "Unfortunately, that system is under tremendous pressure today."

Bradley said that there are some positives to the program including the Tidewater Initiative which requires appraisers to notify lenders where the sale price of a property is higher than the market value.

"What we have today isn't perfect, but it's an important part of ensuring veterans and active-service members are protected when using a VA home loan," Bradley said. "NAR looks forward to working with the VA and Members of Congress to improve this system in the years to come."