Our “crystal ball” feature helps decipher numerous forecasts that weigh the future ups and downs of the economy.
Buzz: Home price appreciation is expected to slow in California and 35 other states over the next 12 months.
Fountain: My trusty spreadsheets reviewed the April edition of CoreLogic’s state-by-state price indexes, which look 12 months ahead and 12 months back.
Look into the future
Let’s start with the forecast. If correct, California prices will rise 4.6% in the year ending April 2025. That’s 12th best among states and above the 3.4% expected nationally.
Bumps? Hawaii with a 6.4% increase, then Alaska with 6.3%, Idaho with 6.2%, Wyoming with 5.8% and Washington state with 5.8%.
Low? Texas at 1.4%, then Arizona at 1.5%, Indiana at 1.7%, Oklahoma at 1.7% and Virginia at 2.3%.
To look behind
The crazy lack of housing affordability will have to catch up to the market eventually. Let’s compare these forecasts with what happened in the 12 months ending in April.
California ranked 15th with price increases of 7% versus 5.3% nationally.
Bumps? New Hampshire at 11.9%, then New Jersey at 11%, South Dakota at 10.8%, Connecticut at 9.9%, and Rhode Island at 9.8%.
Low? Washington, DC at 0.4%, then Louisiana at 1.2%, Texas at 1.4%, Wyoming at 1.6%, and Mississippi at 1.9%.
the chill
Now compare the forecast to history to see the cooldown.
For California, we see a projected slowdown in appreciation of 2.4 percentage points. It is the 24th largest decline among states. And it is greater than the 1.9 point cooling expected at the national level.
The largest projected cooling in price appreciation was found in New Jersey (down 8.6 percentage points over a year to 2.4%), then South Dakota (down 7.2 points to 3.6%), New Hampshire (down 7 points to 4.9%), Rhode Island. (down 6.4 points to 3.5%) and Wisconsin (down 5.7 points to 2.8%).
But like many real estate trends, it’s not universal.
Consider that 15 states are projected to see appreciation increases, led by Wyoming (up 4.2 points to 5.8%), then Idaho (up 4 points to 6.2%), Colorado (up 3.1 points up 5.8%), Utah (up 2.9 points to 5.6%) and Alaska (up 2.5 points to 6.3%).
Oh, and Texas appreciation will remain stable at 1.4%.
Clear or cloudy?
Any slowdown makes sense. It’s last year’s price increases that were illogical.
The gains came despite the highest mortgage rates in two decades and a cooling economy, a combination that is historically bad news for housing searches.
But high home prices and lack of affordability created a dramatic drop in home sales to almost unthinkable levels. That’s the debacle of this cycle.
quotable
“Some cooling is expected as Southern California prices have been particularly strong and some slowing is expected in light of continued high rates,” says Selma Hepp, chief economist at CoreLogic.
Jonathan Lansner is a business columnist for the Southern California News Group. He can be contacted at jlansner@scng.com
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