Price growth is slower but renters are stuck in many markets

Home prices are still rising nationally but even though the pace of increases is slower, renters are still struggling to make the transition to homeownership due to high rents.

CoreLogic’s newly-released Home Price Index for March shows that prices increased nationally by 3.7% year-over-year and by 1% month-over-month.

Although prices are expected to decline by a further 0.3% from March to April, the firm’s HPI Forecast calls for prices to begin to grow to 4.8% over the year to March 2020, making the slower pace of rising prices relatively short-lived for those trying to become first-time buyers.

“The U.S. housing market continues to cool, primarily due to some of our priciest markets moving into frigid waters,” said Dr. Ralph McLaughlin, deputy chief economist at CoreLogic. “But the broader market looks more temperate as supply and demand come into balance. With mortgage rates flat and inventory picking up, we expect more buyers to take advantage of easing housing market headwinds.”

CoreLogic’s Market Conditions Indicators reveal that 35% of the 100 largest metropolitan areas (by housing stock) have an overvalued housing

market as of March 2019; 26% were undervalued, and 39% were at value.

For the 50 largest metro areas, 0% were overvalued, 16% were undervalued and 44% were at value in March 2019.

Renters challenged by cost of renting
A survey conducted by CoreLogic and RTi Research shows that 76% of renters in high-priced markets believe that house prices are also driving up rents in their market.

This creates a double whammy in those markets, with home prices challenging affordability and rents challenging the ability to save a down payment.

“The cost of either buying or renting in expensive markets puts a significant strain on most consumers,” said Frank Martell, president and CEO of CoreLogic. “Nearly half of survey respondents – 44% of renters – cited the cost to rent in high-priced housing markets as the number one barrier to entry into homeownership. This is potentially forcing renters to wait longer to have the necessary down payment in these communities.”