Skip nav to main content.

Nationwide: Rising Home Prices Put a Strain On U.S. housing market

Sustained, rapid home appreciation is weakening the near-term outlook for the U.S. housing market, according…

  • January 3, 2018

Sustained, rapid home appreciation is weakening the near-term outlook for the U.S. housing market, according to insurer Nationwide’s latest Health of Housing Markets Report (HoHM Report).

In fact, many homeowners remain “underwater” – with mortgages bigger than their houses are worth – despite the frenzied appreciation happening across the country.

House price gains continue to run at a pace well above the long-term average as historically few homes on the market create heightened competition among homebuyers.

Job gains, rising incomes, and a healthy mortgage market still support a positive – although slightly less optimistic than last quarter – outlook for the U.S. housing market, Nationwide said.

The outlook for the vast majority of regional housing markets across the U.S. remains upbeat as more than 80 percent of metro areas have a positive ranking.

Moreover, markets with strong ties to the oil and gas industries are among the most improved in 2017 due to solid job growth and rising housing demand.

The 10 top metro areas in the index are, in order: Waterloo-Cedar Falls, Iowa; Carbondale-Marion, Ill.; Philadelphia; Valdosta, Ga.; The Villages, Fla.; Canton-Massillon, Ohio; Gadsden, Ala.; Little Rock-North Little Rock, Ark.; Trenton, N.J.; and, Morgantown, W.Va.

In order, the bottom 10 are: Rapid City, S.D.; Brunswick, Ga.; Rochester, Minn.; Sioux Falls, S.D.; New Orleans-Metairie, La.; Dallas-Plano-Irving, Texas; Victoria1, Texas; Morristown, Tenn.; Waco, Texas; and, Bangor, Maine.

Underwater despite rapid appreciation

Despite continued rapid home appreciation across the country, nearly a quarter of metro markets have not fully recovered from their price peaks before the housing market crash of a decade ago, including a few that are still off by more than 20 percent.

As a result, homeowners in those markets are more likely to be underwater in their mortgages – even today. The national share of mortgages that have negative equity is near 5 percent.

That number doubles for homeowners who live in markets with prices still below their prior peaks.

Major markets that remain below their prior price peaks include Las Vegas-Henderson, Nev. (still 27.7% below the prior peak), Bakersfield, Calif. (23.1%), Fresno, Calif. (21.5%), Tucson, Ariz. (20.3%), Orlando-Kissimmee, Fla. (19.7%), Camden, N.J. (18.7%), Fort Lauderdale, Fla. (16.9%), Riverside-San Bernardino, Calif. (16.4%), Phoenix-Mesa, Ariz. (16.2%), Naples, Fla. (16.2%), Stockton-Lodi, Calif. (15.8%), West Palm Beach-Boca Raton, Fla. (14.8%) Newark, N.J. (14.5%), Jacksonville, Fla. (13.1%) and Detroit-Dearborn, Mich. (12.8%)

One thing seems certain: the craziness will continue into 2018.

Leave a Comment