Home prices increased by 6.9% nationally in April 2018 from the same period last year, and should rise an additional 5.3% over the next year, according to property data provider CoreLogic.
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Further, the CoreLogic Market Condition Indicators (MCI) found that 40% of the 100 largest U.S. metropolitan housing markets were overvalued as of April 2018.
The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued, by comparing home prices to their long-run, sustainable levels.
An overvalued housing market is one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level.
As of April 2018, 28% of the top 100 metropolitan areas were undervalued and 32% were at value.
“The best antidote for rising home prices is additional supply,” said Dr. Frank Nothaft, chief economist for CoreLogic. “New construction has failed to keep up with and meet new housing growth or replace existing inventory. More construction of for-sale and rental housing will alleviate housing cost pressures.”
The most recent Zillow Home Price Expectations Survey, a quarterly survey of more than 100 U.S. real estate experts and economists, showed that almost half of the respondents expect a recession in 2020.
During the Great Recession, according to CoreLogic, home prices fell by 33%.