November 2019

Home values are appreciating at a slower rate. Here's why.

Check out the year-over-year HPI change in your metro area.

Check out the year-over-year HPI change in your metro area
 
Metropolitan Area 12 Month Appreciation Rate - June 2019
Albuquerque NM 4.81%
Anchorage AK 3.55%
Atlanta-Sandy Springs-Roswell GA 5.10%
Bangor ME -0.22%
Boise City ID 11.11%
Boston MA 1.65%
Burlington-South Burlington VT 5.49%
Charlotte-Concord-Gastonia NC-SC 4.26%
Cheyenne WY 5.11%
Chicago-Naperville-Arlington Heights IL 1.67%
Cleveland-Elyria OH 3.81%
Columbus OH 4.98%
Dallas-Plano-Irving TX 3.08%
Denver-Aurora-Lakewood CO 3.81%
Detroit-Dearborn-Livonia MI 6.17%
Fargo ND-MN 0.87%
Houston-The Woodlands-Sugar Land TX 2.01%
Idaho Falls ID 8.65%
Indianapolis-Carmel-Anderson IN 5.37%
Kansas City MO-KS 4.82%
Las Vegas-Henderson-Paradise NV 6.40%
Lexington-Fayette KY 3.66%
Los Angeles-Long Beach-Glendale CA 2.84%
Manchester-Nashua NH 5.62%
Memphis TN-MS-AR 5.83%
Miami-Miami Beach-Kendall FL 3.08%
Milwaukee-Waukesha-West Allis WI 4.91%
Minneapolis-St. Paul-Bloomington MN-WI 4.49%
Mobile AL 4.22%
Nashville-Davidson--Murfreesboro--Franklin TN 4.71%
New Orleans-Metairie LA 2.47%
New York-Jersey City-White Plains NY-NJ 1.29%
Oklahoma City OK 2.66%
Philadelphia PA 7.93%
Phoenix-Mesa-Scottsdale AZ 5.85%
Pittsburgh PA 4.78%
Portland-South Portland ME 4.29%
Portland-Vancouver-Hillsboro OR-WA 2.80%
Providence-Warwick RI-MA 4.13%
Rochester NY 3.17%
Salt Lake City UT 6.38%
San Francisco-Redwood City-South San Francisco CA 0.28%
Seattle-Bellevue-Everett WA -0.55%
Shreveport-Bossier City LA 2.13%
Sioux City IA-NE-SD 4.70%
Sioux Falls SD -0.19%
Spokane-Spokane Valley WA 9.81%
St. Louis MO-IL 1.98%
Honolulu HI (Urban) 0.96%
Washington-Arlington-Alexandria DC-VA-MD-WV 3.67%

Since peaking at 6.6% year-over-year growth in April 2018, national home value appreciation has slowed to 3.4% in June 2019, its lowest level in seven years.1 This decline in home appreciation rates is expected to continue or, at best, maintain its lukewarm growth.

There are, of course, dramatic regional differences, from a 0.5% loss in the Seattle metro area to a 7.9% gain in Philadelphia.

According to a report this July,2 85% of real estate experts forecast a recession beginning in 2020-21. Their outlook is due to factors such as trade policy, a stock market correction and geopolitical events, rather than a housing adjustment itself. However, this deceleration is still expected to influence the residential real estate market.

The impact of a slower appreciation rate

 

How this affects your clients depends mostly on your metro area’s House Price Index (HPI) and whether they’re looking to sell their home or purchase one. If they’re eager to move on, sellers may want to drop their price to get in front of other sellers. Or, if there’s less urgency, clients may decide to take their home off the market to wait out the downturn.

For buyers, in contrast, this ongoing drop in appreciation implies a buyer’s market. Their strategies could include taking more time to find the right home or leveraging this slowdown to negotiate a lower purchase price based on a seller’s fears of depreciation.

At the least, your responsibilities include educating your clients on the wide-ranging implications of a further cooling in the appreciation rate.

1Source data: CoreLogic®

Data date: 08/06/2019

 

2Why the Next Recession Is Likely to Happen in 2020, and What It Will Mean for Housing,” Zillow Research, July 25, 2019.

 

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