According to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, home prices surged 18.8 percent in 2021, the largest increase witnessed in thirty-four years. This nearly 19 percent increase follows 2020’s sizable 10.4 percent increase.

Moreover, while every region in the United States saw prices rise last year, the data indicated that the increase in home prices was more pronounced in the South and the Southeast, with prices in both regions up by more than 25 percent.

Among the twenty cities in the index, Phoenix, Tampa, and Miami reported the biggest price increases. Prices in Phoenix were 32.5 percent higher than last year. In addition, Tampa notched a 29.4 percent increase, and Miami saw a 27.3 percent rise. “We continue to see very strong growth at the city level,” Craig J. Lazzara, managing director at S&P Dow Jones Indices, told CNN Business. “All 20 cities saw price increases in 2021, and prices in all 20 are at their all-time highs,” he added.

Will Prices Ever Come Down?

Given the rapid home price increases, will there be some much-needed relief on the way? According to Zillow, it appears that relief won’t be coming anytime soon. Zillow now expects the year-over-year rate of home price growth to peak at a whopping 21.6 percent by May.

“Annual home value growth is likely to continue accelerating through the spring before peaking at 21.6 percent in May, before gradually slowing through January 2023,” wrote Zillow’s researchers.

“Monthly home value growth is also expected to continue accelerating in coming months, rising to 1.7 percent in February and growing to 1.9 percent in April before slowing somewhat. By the end of January 2023, the typical U.S. home is expected to be worth more than $380,000,” they added.

What About Rising Mortgage Rates?

According to Lazarra, rising mortgage rates—which have increased to nearly 4 percent for a thirty-year fixed-rate mortgage—could possibly help in moderating home prices going forward. But that is also worrisome, as the 2008 Recession came about largely because of mortgages and a housing loan economic bubble.

“In the short term, we should soon begin to see the impact of increasing mortgage rates on home prices,” he said.

Danielle Hale, the chief economist at Realtor.com, shared similar sentiments with CNN. “A marked change may be ahead for growth as rising mortgage rates eat into homebuyer purchasing power,” she said. “With home prices expected to continue rising, even at a slower pace, affordability will increasingly challenge 2022 buyers as a decade-long underbuilding trend has left the housing market 5.8 million homes short of household growth,” Hale added.

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.