Affordability a pressing issue
Housing prices are rising locally, but many U.S. cities are seeing bigger increases.
Home prices in the Houston metro appreciated at about half the national rate in March, as affordability continued to be a concern in markets across the country, a new CoreLogic report showed.
CoreLogic, a property information and analytics company based in Irvine, Calif., last week released its Home Price Index and HPI Forecast for March.
Home prices increased by 3.4 percent in the Houston metro area from a year earlier, while prices rose nationally by 7 percent during the period. The Houston HPI increased 3.2 percent annually in February.
“Home prices grew briskly in the first quarter of 2018,” CoreLogic chief economist Frank Nothaft said in an announcement. “High demand and limited supply have pushed home prices above where they were in early 2006. New construction still lags historically normal levels, keeping upward pressure on prices.”
Housing is considered overvalued by CoreLogic in 37 percent of the nation’s top 100 metros, including Houston and other large Texas cities. The company defines overvalued markets as having home prices that are at least 10 percent higher than the long-term sustainable level.
Shad Bogany, broker associate with Better Homes and Gardens Real Estate Gary Greene, says while home prices in Houston are up, “if you go anywhere outside of the state, the value you get for Texas cities is much nicer.”
“I don’t think we’re in a bubble here in Houston,” Bogany said. “I do think affordability is huge problem.”
Every state gained value year-over-year in March, with Texas showing a 5.8 percent gain. Nevada and Washington rose most at 12.6 percent.
Houston home prices are projected to rise 2.4 percent over the next year, compared with 5.2 percent for the nation, CoreLogic said.
“The dream of homeownership continues to fade away for the average prospective buyer,” CoreLogic president and CEO Frank Martell said. “Lower-priced homes are appreciating much faster than higher-priced properties, making the affordability crisis progressively worse.”
Bogany says it’s no longer a given for clients with $3,500 in monthly income to be able to afford a house, especially if they have other bills to pay. He sees a shift coming in the types of houses people will be able to buy.
“We’re going to have to change our mindset from single-family to people buying condos, duplexes, that type of dense housing which has never been popular here,” he said. “The units are going to have to be smaller if we’re ever going to make it affordable.”
“I don’t think we’re in a bubble here in Houston.” Shad Bogany, real estate broker