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Home values continue to increase in most markets

round 4 seat dining table overlooking city landscape
May 18, 2016

By Pam Leibfried

The housing market continues to report strong growth in home values, despite a slower rate of appreciation in oil states. A key contributing factor to the continued good news in the housing sector is historically low interest rates that make homes affordable for more consumers. 

Home prices continue to trend upward 

In March 2016 (the latest month for which data is available) home prices nationally increased an average of 6.7 percent vs March 2015. The increase since February 2016 was 2.1 percent. 

These numbers, as reported in the CoreLogic Home Price Index (HPI®) Report, bring average housing prices nationally to within 5.3 percent of April 2006 highs. Current national home values represent a nearly 40% increase from their low point in March 2011. A key outlier is Nevada, whose cities were hit particularly hard by the housing market crash in 2007. Although home prices there have recovered some of their lost value, prices are still 29.7 percent below their 2006 peak in that state. 

Historically low interest rates

According to Core Logic’s economists, “our nation has not had such a lengthy period of low mortgage rates since bumper stickers read ‘I like Ike.’” Those of us who are saving-oriented are likely frustrated by this low interest environment because our savings accounts don’t earn as much as they did a few years back. But there is no denying that these historically low rates are a great boon to homebuyers – and to the millions of homeowners who have refinanced their older, higher-rate mortgages at today’s lower rates. 

In our January home price trends wrap-up, we examined how the current low rates can result in affordable monthly mortgage payments even at today’s higher prices. The example we used was my own condo, whose value has increased by 63% in the 21 years I’ve lived there. Yet someone buying it today – at 63 percent more than I paid – would actually have a lower monthly mortgage payment than I did when I bought it at the lower price in 1995! 

Impact of oil price declines on housing

Core Logic identified a trend of slower home value appreciation in areas that have been particularly hard hit by lower oil prices. Although home values in oil patch areas like North Dakota, Oklahoma and Texas have not seen declines, their rate of appreciation has experienced a major slowdown that is perhaps most easily explained using the example of Midland, Texas. This metropolitan area has the highest proportion of oil workers of any city in the nation. The year-over-year home value increase from March 2014 to March 2015 was 9.4 percent in Midland, but dropped off to only 3.6 percent from March 2015 to March 2016. So if you’re in the market for a new home in Texas or another oil state, this means you’ll get more bang – well, really, more square feet – for your buck than you might in other states. 

Pam Leibfried is a marketing content specialist whose love of words led to a writing and editing career. After a brief stint teaching English, she transitioned to corporate communications and spent 20 years at The Nielsen Company before joining Alliant’s content development team. Early in her work life, Pam’s friend Matt explained the benefits of a 401(k) and her dad encouraged her to start a Roth IRA. Their good counsel prompted her to prioritize retirement savings, which just might enable her to retire early so she can read more and live out the slogan on her fave T-shirt:  “I have a retirement plan: I plan on quilting.”