Home Price Appreciation Hits Another Record High

Thanks to our awesome friend Tammie Crainich at LoanDepot we were able to get this update on the market!

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices rose 1.6% in July and 20% year over year. This annual reading set another record high, beating June’s 18.6% record.

The 20-city index also rose 20% year over year, with all the cities showing strong gains. Phoenix (+32%), San Diego (+28%), and Seattle (+26%) continued to report the highest annual gains.

The Federal Housing Finance Agency (FHFA) also released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. While you can have a million-dollar home with a conforming loan amount, the report most likely represents lower-priced homes, where supply has been tight and demand strong.

Home prices rose 1.4% in July and they were also up 19% year over year. This is the first time in recent memory that we have seen FHFA’s data below Case Shiller’s.

This dynamic shift could mark the peak of year-over-year appreciation gains. While monthly appreciation gains are still expected to occur, they could start to slow and this would make the year-over-year figures start to come down a bit. It’s important to note this does not mean home prices are expected to decline because there is still too big of a crop of homebuyers for too few homes. But the pace of gains could slow.

Rents are also rising at a feverish pace. Apartment List reported that rents rose 2.1% in September and 16.4% year to date, up from 13.8% in the previous report. This is the fastest rent growth on record and is on a 22% pace if these increases continue. To put this into context, rents from January 2017 to September 2019 averaged just a 3.4% rise. In addition, only a few cities remain cheaper than they were pre-pandemic, while 22 cities have increased more than 25% from the start of the pandemic.