Real Estate News And Analytics US Home Prices Expected to Fall 6.6% by 2021 by Sylvia Shalhout July 9, 2020July 9, 2020 Sylvia Shalhout July 9, 2020July 9, 2020 When the United States first faced the coronavirus pandemic along with forced quarantines and stay at home orders earlier this year, home price predictions were generally positive. Most real estate experts agreed that US home prices would remain steady throughout 2020. Others said prices would experience a small decline. However, CoreLogic, a global property information provider, put out a report this week of an updated forecast for home prices in the face of the increasing COVID-19 cases in the US. The report essentially predicts that the US housing market will see the first year-over-year (YoY) decline in home prices in 9 years. CoreLogic’s Home Price Index (HPI) and HPI Forecast for May 2020 The Home Price Index is a metric that is used to offer insight into home price trends. It’s based on public records and real estate databases which include 40 years of repeat-sales transactions. This week’s HPI, which represents home price trends for May 2020, showed that home prices actually saw a YoY increase of 4.8% from May 2019. From April 2020 to May 2020, prices increased by 0.7% nationally. Although this may come as a surprise due to the effects of COVID-19 on the economy, housing inventory was still low and the pent-up demand for homes for sale overtook the market again in late spring. Together, these trends led to a continuing increase in home prices. Although the real estate market and prices fared well during the first wave of the coronavirus, CoreLogic predicts that, as COVID-19 continues to hit the economy, prices will actually drop throughout the year, into 2021. The HPI forecast predicts that June 2020 will see a month-over-month (MoM) decline of 0.1%. By May 2021, the report indicates that home prices will experience a 6.6% YoY decline. Still, the housing market has held up during this time and recent activity shows there is a high chance that it will recover. Meaning, there is a low chance of a housing market crash in 2020 or 2021. However, the drop in home prices will come from economic issues, namely high unemployment. Home Prices in Local Real Estate Markets Of course, COVID-19 is affecting different real estate markets across the US in different ways. In May, for example, the Philadelphia real estate market saw a YoY gain of 7.7% for single-family home prices. Compare that to the 1.1% gain the San Francisco real estate market experienced and it’s clear that the national picture doesn’t always reflect the local. Essentially, some markets are at higher risk of home price declines, according to The CoreLogic Market Risk Indicator (MRI). This is a metric that measures the overall health of real estate markets in the US. The MRI predicts that the following locations are high-risk markets for price declines: Prescott, Arizona Lake Havasu, Arizona Daphne-Fairhope-Foley, Alabama Naples and Crestview-Fort Walton Beach, Florida What This Means for Real Estate Investors If you currently own an investment property, you may start to worry about the possibility of home price declines. However, if it’s a rental property that is producing positive cash flow, then continue to hold onto the property for now. If you have plans to sell, act now before prices drop. Buyers are currently in the market shopping and you likely won’t have to lower your asking price. You can list your property for sale here for free. If you plan on buying an investment property to rent out, drops in prices are a good time to invest in real estate. As prices are expected to start their fall now, during the summer real estate market, start searching for real estate deals immediately. You can do so quickly and easily using Mashvisor’s real estate investment tools. And remember, this is general advice based on national real estate market trends. Your local housing market may be faring better – or worse. So before making a move, it’s best to speak with a local real estate agent. Find a top-performing real estate agent now. Sign up now to Mashvisor to stay updated on real estate news around the US. To learn more about how COVID-19 is affecting the US real estate market, click here. Start Your Investment Property Search! START FREE TRIAL Property Prices 0 FacebookTwitterGoogle +PinterestLinkedin Sylvia Shalhout Sylvia was the Content Marketing Manager at Mashvisor. As a real estate writer, she has been covering topics for the beginner and advanced real estate investor, helping them make smarter decisions as well as real estate agents looking to take their business to the next level. 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