Home prices experienced a sharp year-over-year surge in March, according to data contained in a CoreLogic report. In addition, the document contains predictions that these properties will surge 6.7 percent in the next year.
If this forecast is accurate, falling affordability could reduce loan origination, which in turn could hinder loan sales by reducing the supply of available mortgage debt.
Figures from the CoreLogic Home Price Index report showed that nationwide, these values appreciated 11.1 percent in March 2014 from the same time in 2013 when including distressed sales. As a result of the latest improvement, home prices have experienced year-over-year gains for every one of the last 25 months.
The sharp appreciation that these values experienced in March came after they surged 11.8 percent in February, which represented the most rapid expansion in eight years, according to MarketWatch.
Some states experienced very robust year-over-year appreciation. When including distressed sales, California home prices surged 17.2 percent during the period. Nevada experienced a 15.5 percent increase in these values. Properties gained 12.2 percent in Oregon. They rose 12.4 percent in Georgia, and 12.3 percent in Hawaii.
In addition, home prices in many states reached all-new highs, according to CoreLogic data reported by The Washington Post. Properties in the District of Columbia, Colorado, Wyoming, North Dakota, Texas and South Dakota all appreciated to these new record levels.
Bubble not a concern, says expert
Mark Fleming, chief economist for CoreLogic, stated there is no cause to fear another real estate bubble in these specific markets, according to the media outlet. He said that business conditions are getting stronger in these particular areas, and that there is no reason to worry about housing prices if they rise along with the economy.
"You only need a little positive price appreciation and strong demographics going in your favor in those areas to surpass the prior peak," Fleming said, the news source reported. "None of those were bubble markets."
Month-over-month appreciation modest
In addition, the CoreLogic chief economist noted the minor gain that home prices experienced between March 2014 and February. Including distressed sales, these values rose 1.4 percent between the two periods.
"March data on new and existing home sales was weaker than expected and is a cause for concern as we enter the spring buying season," Fleming said. "Interest rate-disenfranchised potential sellers are adding to the existing shadow inventory, while buyers who can't find what they want to buy are on the sidelines creating a new kind of 'shadow demand.' This supply and demand imbalance continues to drive home prices higher, even though transaction volumes are lower than expected."
However, some states have home prices that are still far behind where they were during the last real estate boom, according to The Washington Post. In some of these areas, investors purchased discounted properties in an effort to lock in strong returns. When homes became more expensive, these market participants lost interest.
These developments could potentially ease the pressures that would undermine loan origination and loan sales.