According to the CoreLogic Home Price Index (HPI) and HPI Forecast for April 2021, national home prices increased 13% year over year and 2.1% compared to March.
Sparse inventory and high demand continues to place upward pressure on home prices, creating challenges across generations as buyer preferences shift, CoreLogic says. Younger Millennials continue to enter the market in droves while older Millennials look to upgrade and upsize their homes.
In a recent CoreLogic consumer survey, the need for more space was noted as the top driver (64%) for demand among these cohorts.
The increased competition among buyers may cause a ripple effect and create affordability challenges for Baby Boomers interested in downsizing or relocating. Notably, 72% of this cohort list the desire for a new location as the main reason for wanting to purchase a new home.
However, in response to rising prices, Baby Boomers – who own 54% of the nation’s homes – may wait to sell, creating further inventory pressures for older Millennials seeking move up-purchases.
“As older homeowners become more comfortable with listing their homes, they are faced with the reality that if they sell, they may get a smaller home for the same price as what they already have,” says Frank Martell, president and CEO of CoreLogic.
“Rather than decreasing their financial burden and cashing out equity to support their retirement, Baby Boomers may choose to stay put – which could exacerbate inventory challenges,” he adds.
“Baby Boomers are staying in their homes longer, slowing the pace with which existing homes come on the for-sale market,” adds Dr. Frank Nothaft, chief economist at CoreLogic. “Owner occupants today have been in their homes for a median of 13 years – about 50 percent longer than the previous generation.”
Other data from April show that appreciation of detached properties (14.7%) was more than double that of attached properties (7.2%) as prospective buyers continue to seek out more space.
In April, home prices rose sharply in the west, with Coeur d’Alene, Idaho, experiencing the highest year-over-year increase, at 31.4%. Boise City, Idaho, ranked second, with a year-over-year increase of 28.6%.
At the state level, Idaho and Arizona continued to have the strongest price growth, at 27.2% and 20.4%, respectively. South Dakota also had a 19.3% year-over-year increase as new home buyers seek out more affordable options, space and low property taxes.
Home prices are projected to increase 2.8% by April 2022, as affordability and supply challenges drive potential buyers out of the market, causing a slowdown in home price growth.