Skip to content

Home Prices Still Up

January 9, 2017

Image

The major housing-data providers’ data continue to show rising home prices. CoreLogic is the latest data provider to confirm what most of us already know: Home prices around the country show few signs of backsliding. 

CoreLogic’s Home Price Index showed that home prices increased 7.1% year over year in November.  Month over month, prices were up 1.1%.  This is an impressive advance when you consider that mortgage rates were up as much as 50 basis points in November. The housing market continues to show resiliency, and perhaps under-appreciated resiliency. 

As for the future, CoreLogic’s chief economist expects the rate of home-price appreciation to abate.  His logic is similar to the logic we’ve offered since mortgage rates took flight in November: Higher interest rates will lead to slower price appreciation. 

Because interest rates are a discounting mechanism, they tend to correlate negatively with asset prices. When interest rates rise, asset prices tend to fall, and vice versa. Of course, this is a tendency; it’s no guarantee for any particular market. A home, unlike a stock or a bond, is heterogeneous — no two homes are alike. In any particular market, home prices could continue to rise with rising mortgage rates.  That said, when the numbers from around the country are aggregated, chances are good that the average rate of home-price appreciation will fall if mortgage rates continue to rise.  

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: