Business View Civil and Municipal | January 2021

9 CIVIL AND MUNICIPAL JANUARY 2021 SUPER-SELLERS’ MARKET MAY HINDER AFFORDABILITY OUTLOOK FOR 2021, ACCORDING TO FIRST AMERICAN REAL HOUSE PRICE INDEX “Will robust house-buying power be enough to offset the growth in nominal house price appreciation expected next year or will the trend of declining affordability continue?” asks Chief Economist Mark Fleming F irst American Financial Corporation, a leading global provider of title insurance, settlement services and risk solutions for real estate transactions has released the October 2020 First American Real House Price Index (RHPI) . The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state, and metropolitan area levels. Because the RHPI adjusts for house- buying power, it also serves as a measure of housing affordability. Chief Economist Analysis: Super-Sellers’ Market Emerges “The housing market prior to the pandemic could have been characterized as a sellers’ market, with a shortage of supply relative to demand. With the current supply of homes for sale even tighter relative to demand, it can only be characterized as a super-sellers’ market today. The pandemic has intensified a sense of home as refuge and falling mortgage rates have made financing a home purchase historically inexpensive,” said Mark Fleming, chief economist at First American. “As a result, demand for homes has surged while the supply of homes for sale has fallen to near record lows, resulting in rapid house price appreciation. Nominal house price appreciation was 7.9 percent higher in October than in March of this year, a precipitous rise in just seven months that has pushed back against the 10.7 percent increase in house-buying power over the same period. “The good news is affordability has improved nationally OPENING L INES