AEI Housing Center Releases Positive Predictions For Home Price Appreciation

By SCOTT KIMBLER

Home price appreciation will continue to climb throughout 2024, according to the latest analysis by leaders at AEI Housing Center.

Tobias Peter, co-director and senior fellow at AEI, spoke during a presentation earlier this month and said even though purchase volume is down, data suggests home price appreciation will rise over the course of this year.

Peter said because buyers are well qualified and there is continued competition due to the strong sellers’ market, HPA is expected to be around 5% by December.

Those numbers can vary. A bullish projection shows an increase of between 6% and 8%. A bearish projection ranges from 0% to -2%.

Data from February showed month-over-month HPA was up 1.1%, a reversal of the downward trend that started in October.

As always, location matters.

Peter shared recent year-over-year HPA for the 60 largest metro areas in the US. He pointed out that eight of the ten fastest growing markets were in the Midwest and included Indianapolis, Milwaukee, St. Louis, Cincinati, and Chicago.

San Jose, San Diego, Providence, and Virginia Beach were also on the list. Peter explained that these metros had modest price increases during the pandemic period, making them attractive markets.

Peter said that eight of the metros with the slowest HPA growth were in the south and included New Orleans, Memphis, Nashville, and Jacksonville.

Austin, San Antonio, and San Francisco also saw a slowing down of HPA.

Lack of inventory is still the main driver of home prices rising nationally.

Peter said that housing supply levels continue to run well below pre-pandemic levels. Inventory levels right now are at about 70% of 2017-2019 levels.

With supply at an estimated 4.1 months, it would have to reach more than seven months for HPA to start declining, he said.

Peter said there is hope for buyers who are looking to get into the market this year. Non-banks, such as Rocket Mortgage and United Wholesale Mortgage, are willing to go the extra mile for borrowers.

Political pressure may also come into play as it is a presidential election year. President Joe Biden is under pressure to help fix the housing market. Meanwhile, Donald Trump will also have to propose changes that are helpful to homeowners and buyers as part of his campaign strategy.