Last week, a very well-respected real estate analytics firm surprised many with their home price projection for the next twelve months. This also applies to RCFE homes. CoreLogic, in their latest Home Price Index (HPI) said:
“The economic downturn that started in March 2020 is predicted to cause a 6.6% drop in the HPI by May 2021, which would be the first decrease in annual home prices in over 9 years.”
The forecast was surprising as it was strikingly different than any other projection by major analysts. Six of the other eight forecasts call for appreciation, and the two who project depreciation indicate it will be one percent or less.
Here is a graph showing all of the projections:
There’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. This is also true for RCFE homes.
Last week mortgage applications to buy a home were 33% higher than they were at the same time last year. This number includes mortgage applications for RCFE homes. The available inventory of homes for sale is 31% lower than it was last year. Normally, these numbers should call for homes (including RCFEs) to continue to appreciate. We have seen a great drop in the number of RCFE homes available for sale, despite the increased demand noted beginning mid-May.
Because of the uncertainty with the pandemic, any economic prediction is extremely difficult. However, looking at the limited supply of homes (and RCFEs) for sale and the tremendous demand for housing, it is difficult to disagree with the majority of analysts who are calling for price appreciation.
If we can be of assistance with your purchase, sale or lease of an RCFE or other property please call us today for your FREE Consultation:
Michelle (949) 397- 4506 & Melvyn (949) 500-3630