An interesting public-relations ploy in the mortgage finance industry is to never refer to rising prices as inflation. Instead, industry representatives always refer to it by the more palatable, and deceptive, moniker of “home price appreciation.” Given that perspective, then, consider another indicator that the second big housing bubble of the 21st Century continues to … appreciate.
Home prices in nearly half of the top 50 markets in the US are overvalued, according to a report released this week from CoreLogic, a global property information, and analytics firm based in Irvine, CA. In its analysis of the country’s 100 largest metropolitan areas based on housing stock, the company found that 36 percent of cities have an overvalued housing stock as of September 2017, with 28 percent of the top 100 metro areas being undervalued and 36 percent being properly valued. “When looking at only the top 50 markets based on housing stock, 48 percent were overvalued, 16 percent were undervalued and 36 percent were at value,” the report said.
CoreLogic defines an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level. An undervalued housing market is characterized by home prices that are at least 10 percent below a level considered sustainable. “Home prices nationwide, including distressed sales, increased year over year by 7 percent in September 2017 compared with September 2016 and increased month over month by 0.9 percent in September 2017 compared with August 2017,” the report said.
Most states saw housing valuations rise, except West Virginia. The states with the highest increases were Utah and Washington, both registering double digit increases – 10.5 percent and 12.5 percent, respectively. Further, CoreLogic’s latest forecast is for home prices to increase by 4.7 percent over the next year. But it’s not a bubble.