Home Prices Won’t Drop Anytime Soon

Home prices are up, and that’s not likely to change anytime soon—at least according to the recent Housing and Mortgage Market Review released by Arch MI on Tuesday.

The report, which presents a state- and metro-level Arch MI Risk Index based on economic and housing market data, showed the likelihood of overall housing price decreases across all U.S. states and major cities at just 4 percent over the next two years. Last year, likelihood of pricing declines was 5 percent and two years ago, it was at 8 percent.

The Risk Index showed risk for pricing drops was relatively stable across the country, with only minor changes in some of the heavy coal-, oil-, and gas-producing regions.

”The vast majority of housing markets across the nation remain healthy and are projected to stay that way through 2018,” said Dr. Ralph G. DeFranco, Global Chief Economist for Mortgage Services of Arch Capital Services Inc. “Looking back at 2016, home prices grew 6 percent and rose in all 50 states.”

According to the report, no single state had more than 50-percent chance of housing price drops over the next two years. This means home price growth will likely continue—and on a sweeping scale.

“This year, conditions are in place for home prices to grow faster than incomes as a result of a tightening job market, still relatively low interest rates, tight supply, and an overall shortage of housing,” DeFranco said.

If pricing declines do happen, they’re most likely in North Dakota, which had a 38 percent change of declines), Wyoming (36 percent), and Alaska (31 percent). All three are currently plagued with weak employment and low home sales, the report stated.

At a metro level, areas most likely to seeing price drops were: Miami and West Palm Beach, Florida; Baton Rouge and New Orleans, Louisiana; Albuquerque, New Mexico; Oklahoma City and Tulsa, Oklahoma; Houston, Texas; Birmingham, Alabama; and Little Rock, Arkansas. Oklahoma City has the highest chances with 21 percent.

The report also included a section on millennials, particularly whether they’re really flocking to more urban areas like everyone seems to assume.

“It turns out that the percentages of millennials choosing to live in cities, suburbs, and rural areas are about the same as for the overall population,” the report stated. “The main obstacle to urban living for this group is likely the cost—few people starting their careers can afford to live in close-in areas (where housing costs have been rising fast for decades.)”

Arch MI releases its Housing and Mortgage Market Review quarterly. To view the full report, visit ArchMI.com/HAMMR.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s