State of the Housing Market – Summer 2017, a Rental Investors Perspective

Successful real estate investing requires that we stay on top of the housing market. We need to know the state of the housing market – where prices are heading; what neighborhoods are in demand; where to put our investment dollars. These facts, and more, help investors choose properties that have the greatest potential to create strong cash flows and above average appreciation.

CoreLogic puts out a monthly Home Price Insights report that gauges what is happening in the housing market. In addition, based on their 40 years of experience, algorithms, and data, they have a great track record of being able to forecast where the market is heading.

So, would you like to know the current state of the housing market? Do you want to know what to expect next year? Here is what we found out.

Home Prices are Beating Inflation

National home prices are rising three times as fast as inflation. Based on the Bureau of Labor Statistics, inflation is running at about 2.1 percent. According to the CoreLogic report, home prices have increased year-over-year (May 2016 – May 2017) by 6.6 percent. This data factors in distressed sales. Most investors anticipate that their investments should appreciate 5 percent per year. The national market is beating that 32 percent!

How about North Carolina home prices? While we did not hit such high growth, the year-over-year increase was 5.5 percent which is still solid and stable.

Forecasted Home Prices

The problem here is that we do not want to find ourselves chasing historical data. We need to know where the market will be heading next year. CoreLogic has forecasted that national home prices will rise 5.3 percent from May 2017 to May 2018. This decrease can be anticipated since mortgage rates are on a slow rise.

How about North Carolina’s forecasted home prices? CoreLogic estimates that we should see an increase of around 4.2 percent for next year.

Rental Market Inflation

“The market remained robust with home sales and prices continuing to increase steadily in May. While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1 percent on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment (defined as properties with rents less than 75 percent of the regional median rent) increased 4.7 percent over the same time, well above the pace of overall inflation.” Frank Nothaft, Chief Economist as CoreLogic.

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