Home prices rose at a nice clip in 2016 as buyers, encouraged by job growth and exceptionally low mortgage rates, competed for slim pickings. Prices increased 5.8% nationally, compared with 4% in 2015, according to Clear Capital, a provider of real estate data and analysis. But with home prices out of reach for many first-time buyers, a limited supply of homes for sale and mortgage credit still tight, Kiplinger forecasts that price increases in 2017 will revert to a 4% pace—the historical U.S. average.
Home values rose in 253 of 276 cities tracked by Clear Capital, going up by double digits in about one-fifth of them. The cities with the biggest gains were buoyed by vibrant local economies, where rising population and job growth fueled demand. They include Deltona, Fla. (with a gain of 14.7%), Austin, Texas (14.5%), Salt Lake City (12.3%), Seattle (11.4%) and Portland, Ore. (11.4%).
But many homeowners have been left behind in the latest price run-up. Average prices remain nearly 12% below the peak they hit just before the housing bust a decade ago. And home values fell in a couple of dozen metro areas—mainly in parts of the Northeast, Mid Atlantic, and industrial Midwest and South. The price drops occurred mostly in smaller cities with lackluster economies, such as Watertown, N.Y. (–7.2%), South Bend, Ind. (–7.6%), Atlantic City, N.J. (–9.9%), and Baton Rouge, La. (–3.3%), where the economy took a hit because of declining oil prices.
During the last boom, “everyone did well,” says Alex Villacorta, vice president of research and analytics at Clear Capital. “In the downturn, everyone did badly. As the recovery began, everyone got a bump-up. Now, there are winners and losers.”