Home prices rose this year in every state except these two
Although mortgage rate forecasts may be mixed, single-family home price data continues to show an increase year-over-year. That is, with the exception of two states, according to CoreLogic.
Alaska and Connecticut showed slight decreases between September 2015 and September 2016, according to the CoreLogic Home Price Index. Prices fell 0.3 percent in Alaska and 1.4 percent in Connecticut. Nationally, prices increased 6.3 percent year-over-year.
Undervalued Areas, Increasing Inventory
Two of Connecticut’s metro areas are considered among the nation’s five most undervalued housing markets, according to a recent article in Forbes.
“The most undervalued metro areas are largely places that have struggled with a loss of industry, leaving fewer employment options for residents,” the Forbes article states, using General Electric moving its headquarters from Fairfield, Connecticut to Boston, Massachusetts as one example.
Meanwhile, in some parts of Alaska, neighborhoods are experiencing what seems to be a rarity in other parts of the country: an increase in housing inventory. The housing market in Anchorage had 999 active listings in September, the highest inventory of for-sale properties since 2011, according to the Alaska Journal of Commerce.
Meanwhile, nationwide unsold housing inventory was at a 4.5-month supply in September, according to the National Association of Realtors®, down from 4.6 months in August. The squeeze on housing inventory, lower than the normal 6-month supply, is contributing to a surge in prices in many parts of the country.
Where Prices are Rising
The states with the five highest price increases year-over-year in September were Washington (10.3 percent), Oregon (10.1 percent), Colorado (8.6 percent), Utah (7.8 percent), and Florida (7.5 percent), according to CoreLogic.
The good news for homeowners is that an increase in home prices has contributed to a boost in home equity values.
“Home-price growth creates wealth for owners with home equity,” Anand Nallathambi, president and CEO of CoreLogic, says in a statement. “A 5 percent rise in home values over the next year would create another $1 trillion in home equity wealth for homeowners.”
Home equity wealth has doubled over the last five years to $13 trillion, “largely because of the recovery in home prices,” Frank Nothaft, chief economist for CoreLogic, says in a statement.
What’s been the average boost per homeowner with the rise in home prices?
Though there’s wide geographic variation, nationally the average gain in housing wealth was $11,000 per homeowner during the past year, Nothaft says.
Although it’s not a one-stop income solution for all, home equity has the potential to address retirement needs for the Baby Boomer generation, according to a recent Urban Institute study sponsored by Fannie Mae.
The Federal Reserve Board’s 2013 Survey of Consumer Finances estimates that home equity for Baby Boomers in the U.S. totals $6.3 trillion.