After taking a break in the summer, home price growth got back up to strength in September, according to statistics reported by DataQuick in the company’s monthly Property Intelligence Report. Other metrics, however, weakened.
DataQuick, a specialist in property information and decisioning solutions, reported price growth “resumed at a rapid rate in September and spread to all” of its 42 reporting counties on a monthly, quarterly, and yearly basis.
With the exception of July and August, DataQuick says home price growth has spread consistently around the country in the last 12 to 18 months, with all reporting markets seeing growth “in excess of their long term average.”
Gordon Crawford, Ph.D., VP of analytics for the company, says the impact of this growth can be seen in all aspects of housing.
“Some immediate implications to look for include an increase in home price listings and overall sales as
homeowners with negative equity are gradually swept toward a position of positive equity, a decrease in foreclosures as homeowners have the equity to sell and avoid default, and an increase in demand for home equity lines of credit as borrowers look to tap into increased equity from home price growth,” Crawford said.
Other consequences DataQuick says to look out for: “[C]ontinued single-family rental demand driven by decreases in home affordability, sustained risk of home price corrections and stringent mortgage credit standards, and an increase in purchases by investors” driven by the two preceding factors.
The risk of a “substantial correction” runs especially high as growth rates remain elevated, Crawford warns—especially since that growth isn’t supported by steady economic fundamentals.
“In the past, moderate economic fundamentals have support long term home price growth rates of three to four percent respectively,” he said, noting that the yearly growth average across all 42 counties is roughly 16 percent currently. “While generally positive, current economic drivers are weaker than those experienced in most previous expansions, leading to considerable uncertainty about future economic prospects.”
In other findings, sales dipped in most measures, with 26 counties reporting monthly increases, 28 reporting quarterly increases, and 29 posting yearly improvement (compared to 29, 37, and 28 in August, respectively).
Foreclosure statistics were similarly discouraging. Twenty-four of the 42 reporting counties experienced a decline in foreclosures from August, down from 31 in August. Twenty-six reported a decline over the last quarter, while 24 reported a drop over the last year—that’s compared to 26 and 28, respectively, in August.