Veros Real Estate Solutions, a provider of enterprise risk management solutions, collateral valuation services and predictive analytics, released a report July 15 that shows approximately 80 percent of the country’s real estate markets are forecasted to appreciate in value during the next 12 months, while 20 percent are forecasted to experience depreciation, and all but the most upbeat markets are slowing in their value improvements.
This insight is from the company’s VeroFORECAST national real estate market forecast for the 12-month period ending June 1, 2015. The forecast is updated quarterly and covers more than 1,000 counties, 340 metro areas and 13,770 Zip codes.
Northern California metro areas lead the rest of the country in projected appreciation, while markets in parts of Illinois, New Jersey and Pennsylvania are forecast to be among the poorest performers.
“San Jose housing supplies are down and San Francisco is seeing a serious housing shortage,” said Eric Fox, Veros’ vice president of statistical and economic modeling and developer of VeroFORECAST. “Inventories in both are down 70 percent from their peak in 2008 and demand is outstripping supply, leading to price run-ups and decreased affordability despite low interest rates. There just aren’t enough houses available that people can afford to buy, so those that remain are hotly contested.”
Veros’ future home price index (HPI) forecast indicates that, on average for the top 100 metro areas, there will be 2.5-percent appreciation over the next 12 months, down from last quarter’s 3.4 percent forecast. This is the eighth consecutive quarter where the index has shown forecast appreciation, but the pace has continued to slow down.
The bottom five markets according to VeroFORECAST have seen slight softening. In the previous quarter’s update, the weakest market, Atlantic City, N.J., tracked at -2.5 percent, faring better than this quarter’s weakest, Rockford, Ill., at -3.4 percent.
“Rockford real estate is experiencing hard times, going from -2.6 percent to -3.4 percent in a single quarter,” Fox said. “The culprit is its 10.4-percent unemployment rate coupled with a flat population growth trend. These are familiar and persistent themes among the weakest markets. In summary, we are still seeing good appreciation in the top markets, but there is definite slowing overall.”
Projected Five Strongest Markets*
- San Jose-Sunnyvale-Santa Clara, Calif., (+10.6 percent);
- San Francisco-Oakland-Fremont, Calif., (+10.5 percent);
- Austin-Round Rock, Texas (+10.0 percent);
- San Diego-Carlsbad-San Marcos, Calif., (+9.0 percent); and
- Houston-Sugar Land-Baytown, Texas (+8.9 percent).
Projected Five Weakest Markets*
- Rockford, Ill., (-3.4 percent);
- Trenton-Ewing, N.J., (-2.9 percent);
- Scranton-Wilkes-Barre, Pa., (-2.6 percent);
- Poughkeepsie- Newburgh-Middletown, N.Y., (-2.5 percent); and
- Atlantic City, N.J., (-2.2 percent).
*Markets demonstrated are for residential real estate in major metro areas (typically greater than 250,000 residents) among single-family homes in the median price tier.