Home price growth likely to decelerate in 2022
Home prices posted a double-digit gain for the third consecutive month in April, and data suggests that multi-generational demand may be exacerbating the housing affordability dilemma.
CoreLogic’s Home Price Index rose 13% year over year and was up 2.1% month over month in April. According to CoreLogic’s report, tight inventory and surging demand continue to put upward pressure on home prices, “creating challenges across generations as buyer preferences shift.”
Younger millennials are entering the market in droves, while older millennials look to upgrade and upsize their homes. The heated competition among buyers may discourage baby boomers - who own 54% of the nation’s homes - from selling. This creates a ripple effect and further inventory pressures for older millennials seeking move up-purchases.
Appreciation of detached properties (14.7%) was more than double that of attached properties (7.2%) in April as prospective buyers continue to seek more space.
“As older homeowners become more comfortable with listing their homes, they are faced with the reality that if they sell, they may get a smaller home for the same price as what they already have,” said Frank Martell, president and CEO of CoreLogic. “Rather than decreasing their financial burden and cashing out equity to support their retirement, baby boomers may choose to stay put - which could exacerbate inventory challenges.”
CoreLogic forecast a slowdown in home price growth (2.8%) in the next 12 months, as affordability and supply issues drive potential buyers out of the market.
“Baby boomers are staying in their homes longer, slowing the pace with which existing homes come on the for-sale market,” said Frank Nothaft, chief economist at CoreLogic. “Owner-occupants today have been in their homes for a median of 13 years, about 50% longer than the previous generation.”
