Home prices are projected to rise this year only two thirds as much as what they did during 2015, but residential property is still expected to increase in value more than inflation or incomes this year, according to new projections by CoreLogic, an online source of property information and analytics.
CoreLogic, which reviews all property transfers, including distressed sales, estimates Chattanooga home prices rose an average 4.7 percent in the 12 months ending in November.
That was less than the 7.1 percent gain in home prices nationwide, according to CoreLogic, and also trailed the 7.2 percent gain in local home prices recorded in the first 11 months of last year by the Greater Chattanooga Association of Realtors, which tracks sales through its multiple listing service. Realtor-assisted home prices for most of 2016 were up from a median price of $181,046 in 2015 to $194,136 last year.
"Last summer's very low mortgage rates sparked demand, and with for-sale inventories low, the result has been a pickup in home-price growth," Frank Nothaft, chief economist for CoreLogic, said in a report released Tuesday. "With mortgage rates higher today and expected to rise even further in 2017, our national home price index is expected to slow to 4.7 percent year over year by November 2017."
Although slower than the appreciation in home values this year, the 4.7 percent forecasted gain is still likely to top inflation, which rose only 1.8 percent last year, or incomes, which most economists are predicting will increase somewhere between 2 and 4 percent this year.
"Home prices continue to march higher, with home prices in 27 states above their pre-crisis peak levels," said Anand Nallathambi, president and CEO of CoreLogic. "Nationally, the CoreLogic Home Price Index remains 4 percent below its April 2006 peak, but should surpass that peak by the end of 2017."
Chattanooga home prices have topped their pre-recession low and Realtor-assisted home sales reached an all-time peak in 2016.
"The surprising thing to me is that we really didn't have a lag month all year," said Nathan Walldorf, the 2016 president of the Greater Chattanooga Association of Realtors. "Every month, our average price just continued to go up. We just had a great year in real estate."
Mark Hite said the shrinking inventory of homes on the market tended to push up home prices.
"The inventory of homes was down 20 percent - that was a huge decline - and as a result the average time to sell the typical home was only 64 days," Hite said in the Realtors' most recent report of sales activity.
Realtor-assisted home sales in Chattanooga in the first 11 months of the year were up 10 percent from the record pace in 2015 to 8,850 residential units.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.