The carefully followed CoreLogic Home Price Insights report for June has just been released. It looked at home prices by state and city. It examines places where prices have surged, as well as cities where they are most likely to drop. This forecast of potential price declines goes through June 2022.
The broadest conclusion of the report is that “Home prices nationwide, including distressed sales, increased year over year by 17.2% in June 2021 compared with June 2020 and increased month over month by 2.3% in June 2021 compared with May 2021.” However, a small number of cities are at risk for prices to tumble in the near future.
The residential real estate boom in America is truly remarkable and may be looked back on as the period when home prices rose the most in decades. It is fueled largely by people who want to leave the west and east coast’s large, expensive cities. Many of these people have moved inland to smaller cities with lower costs of living and perceived better lifestyles. However, the flood of people into some states and cities has pushed prices so high that affordability in these smaller cities has become an issue. In some areas, homes only stay on the market for days, and occasionally less.
It is rare, but not unimaginable, that some cities and states will not post extraordinary increases but face price erosion.
The cities most at risk for a drop in home prices are in central Massachusetts and an area inland from the California coast. The part of the CoreLogic report that covers cities where prices are likely to fall reads:
The CoreLogic Market Risk Indicator (MRI), a monthly update of the overall health of housing markets across the country, predicts that metros such Springfield, Massachusetts [are] at the greatest risk [(25-50%)] of a decline in home prices over the next 12 months.
A drop in prices is less probable in the next four cities on the list, according to the report:
- Worcester, Massachusetts
- Chico, California
- Oxnard, California
- Norwich, Connecticut