07/20/2018
95% likelihood home prices will rise over the next two years
Below-normal levels of construction coupled with a strong job market suggest that home prices have a 95 percent chance of rising over the next two years, though in Florida the report says it's 92 percent. The increases are likely to occur more rapidly in the entry-level housing segment.
"Millions of entry-level homes were converted from owner-occupied to investor-owned rentals during the foreclosure crisis and higher development costs – ranging from utility hook-up fees to building permits – are leading builders to focus on constructing larger, more expensive houses. With fewer new starter homes, the most likely scenario is continued – rapid price growth of existing homes, particularly at the lower end of the market."
The states with the highest risk of having lower home prices in two years are Alaska (27 percent) and West Virginia (22 percent).
Among larger metros, the cities with the highest risk of lower prices over the next two years include Houston, Texas (22 percent) and San Antonio, Texas (16 percent), mainly because their home prices are far higher than expected compared to the historical relationship between prices and incomes.
