As the extremes of inventory shortages, strong buyer demand, and cheap interest rates converged, property value growth hit levels in March that have not been seen since the rise of the property bubble, according to CoreLogic.
The property price index rose annually by 11.3% in March and by 2.2% from February. It represents the index's biggest year-over-year growth since March 2006. The rate has more than doubled last year’s growth of 4.6%, while exceeding the projected 0.5% by almost 23 times, despite that forecast uncertainties occurred due to many pandemic-related events. The data provider is forecasting another 1.1% jump in April, with the spring buying in full bloom.
"The spring 2021 home season is very trending – reflecting the many positive signs of economic recovery," said Frank Martell, President and CEO of CoreLogic, in the report. "As potential buyers continue to be motivated by historically low mortgage rates, we expect demand to continue through the summer and early fall."
CoreLogic, while robust right now, expects these market conditions to improve as affordability hurdles decrease the number of home shoppers. This is a challenge, especially for first-time buyers, as the prices for properties in the typical price range for starter houses rose by 15.1% annually.
Since it is expected that fewer consumers will argue about the limited offers and more vaccinations will contribute to increasing the supply, the rate of increase in value is likely to decrease over the next year. The data provider is forecasting an annual price increase of 3.5% for March 2022.
At the state level, Idaho home price growth remained well above the rest of the country, up 25% year over year in March. Montana and Arizona were behind at 18.8% and 18%, respectively. At the other end, North Dakota had the lowest growth rate at 4.7%, followed by 5% in New York and 5.5% in Mississippi.
Phoenix led among the 10 largest metro areas, up 18.3% year over year. San Diego followed with 14% and Denver with 12%.