Our “crystal ball” feature helps decipher numerous forecasts that ponder the future ups and downs of the economy.
Buzz: Home-price appreciation is projected to slow in California and 35 other states in the next 12 months.
Source: My trusty spreadsheet’s reviewed the April edition of CoreLogic’s state-by-state price indexes, which look 12 months ahead and 12 months back.
Look ahead
Let’s start with the forecast. If it’s correct, California prices will rise 4.6% in the year ending in April 2025. That’s 12th best among the states and above the 3.4% forecast nationally.
Tops? Hawaii with a 6.4% gain, then Alaska at 6.3%, Idaho at 6.2%, Wyoming at 5.8%, and Washington state at 5.8%.
Lows? Texas at 1.4%, then Arizona at 1.5%, Indiana at 1.7%, Oklahoma at 1.7%, and Virginia at 2.3%.
Look back
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The crazy lack of housing affordability has to catch up with the market eventually. Contrast these forecasts to what happened in the 12 months ended in April.
California ranked No. 15 with 7% price gains vs. 5.3% nationally.
Tops? New Hampshire at 11.9%, then New Jersey at 11%, South Dakota at 10.8%, Connecticut at 9.9%, and Rhode Island at 9.8%.
Lows? Washington, D.C. at 0.4%, then Louisiana at 1.2%, Texas at 1.4%, Wyoming at 1.6%, and Mississippi at 1.9%.
The chill
Now compare the forecast to history to see the cooldown.
For California, we see a projected 2.4-percentage-point slowdown in appreciation. It’s the 24th-biggest reversal among the states. And it’s bigger than the 1.9-point cooling foreseen nationally.
The largest projected chill in price appreciation was found in New Jersey (down 8.6 percentage points in a year to 2.4%), then South Dakota (down 7.2 points to 3.6%), New Hampshire (down 7 points to 4.9%), Rhode Island (down 6.4 points to 3.5%), and Wisconsin (down 5.7 points to 2.8%).
But like many real estate trends, it’s not universal.
Ponder that 15 states are projected to have appreciation increases, topped by Wyoming (up 4.2 points to 5.8%), then Idaho (up 4 points to 6.2%), Colorado (up 3.1 points to 5.8%), Utah (up 2.9 points to 5.6%), and Alaska (up 2.5 points to 6.3%).
Oh, and Texas appreciation will be flat at 1.4%.
Clear or cloudy?
Any deceleration makes sense. It’s the past year’s price increases that were illogical.
Gains came despite the highest mortgage rates in two decades and a cooling economy – a combo that’s historically bad news for house hunting.
But housing’s high prices and lack of affordability created a dramatic drop in home sales to almost unthinkable lows. That’s this cycle’s debacle.
Quote-able
“There is some cooling expected as SoCal prices have been particularly strong and there is some slowing expected in light of continually high rates,” says Selma Hepp, CoreLogic’s chief economist.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
