Homes in the Chicago area increased in value by 0.8 percent for the 12-month period ending in October and were identified as fairly valued, according to CoreLogic’s Home Price Index Report. That rise was much lower than the overall average, however.
Nationally, home price values rose both year over year and month over month, with a 3.5 percent increase from October 2018 and a 0.5 percent increase from September 2019.
“Local home-price growth can deviate widely from the change in our U.S. index,” Dr. Frank Nothaft, chief economist at CoreLogic, said in the press release. “While we saw prices up 3.5 percent nationally last year, home prices also declined in 22 metropolitan areas. Price softness occurred in some high-cost urban areas and in metros with weak employment growth during the past year.”
One positive element to the report was that Corelogic identified homes in the Chicago area as fairly valued.
In the 100 largest metropolitan areas, 38 percent of the market was at value, 35 percent was overvalued, and 27 percent was undervalued. Of the top 50 largest areas, 40 percent was overvalued, 40 percent was at value and 20 percent was undervalued.
Another factor in the study of interest to the industry was demographic in nature. Millennials surveyed by CoreLogic were largely unconcerned about qualifying for a mortgage, with 75 percent saying they are confident they would qualify for a loan. However, more than half of those said buying a home would be a stressful experience and would require spending the majority of their savings.
“Interestingly, the persistent increase in home prices isn’t deterring older millennials. In fact, 25 percent of those surveyed anticipate purchasing a home over the next six to eight months,” Frank Martell, president and CEO of CoreLogic, said in a press release.
CoreLogic’s HPI Forecast predicts a 5.4 percent increase through October 2020 and a 0.2 percent increase over the next month.
“Nationally, over the past year, home prices are up 3.5 percent with the rate of growth accelerating from September to October,” Martell said. “We expect home prices to rise at least another 5 percent over the next 12 months.
The relatively positive news from CoreLogic came on the heels of a report by Goldman Sachs expressing confidence that U.S. economic growth is improving, and that real estate may indeed be driving expansion. The report, titled “Global Economic Outlook 2020: A Break in the Clouds,” cited the “sharp drop in mortgage rates” as one of the drivers of a reinvigorated economy.
“The structural outlook for housing is also strong, as the level of building activity remains well below demographic demand and the homeowner vacancy rate has now fallen to a 38-year low in seasonally adjusted terms,” the report stated.