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Home Price Appreciation Reaches New High

CoreLogic released their Home Price Index report for December, showing that home prices rose by 1.3% from November and 18.5% year over year. This annual reading is an acceleration from 18% in November and is the highest reading in the 45-year history of the index. Within the report, the hottest markets remained Phoenix (+30%), Las Vegas (+24%), and San Diego (+22%). CoreLogic forecasts that home prices will remain flat in January and appreciate 3.5% in the year going forward. Yet, they remain conservative in their forecasting and continue to miss forecasts by a large margin. For example, CoreLogic had forecasted prices would remain flat from November to December, and they actually rose 1.3%. And when we look to their report for December 2020, they forecasted that home prices would increase 2.5% annually – and yet they reported today that prices rose 18.5%. Apartment List’s National Rent Report showed that rents also rose 0.2% in January and almost 18% year over year. To put this in context, annual rent growth averaged just 2.3% in the pre-pandemic years from 2017-2019. Over the last four months, rents are up about 1%. While the rise in rents is slowing, this could be due to some seasonal factors and it is possible that higher rent growth may return as more people move once the weather warms.

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