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Veros: Home Prices to Appreciate 5.1 Percent During 2014

NationalMortgageProfessional.com
Jan 16, 2014

Veros Real Estate Solutions (Veros) has found that while residential real estate appreciation trends continue to march up steadily, the previously rapid acceleration of values is starting to slow down. This insight is from the company’s VeroFORECAST real estate market forecast for the 12-month period ending Dec. 31, 2014, updated quarterly and covering more than 1,000 counties, 345 metro areas, and 13,770 zip codes. The majority of the underperforming markets are primarily in the Northeast, with parts of Connecticut and some sections of New York, New Jersey and Maryland expected to fare poorly relative to the remainder of the U.S. due to persistent unemployment and demand factors. Pockets of the South are also forecast to be weak, notably Mississippi and Alabama. Veros’ future home price index (HPI) forecast indicates that, on average for the top 100 metro areas, Veros expects 5.1 percent appreciation over the next 12 months, up from last quarter’s 4.8 percent forecast. This is the sixth consecutive quarter where the index has shown forecast appreciation. “The future HPI forecast continues to show good appreciation, but the markets appear to be topping out for now,” said Eric Fox, Veros’ vice president of statistical and economic modeling and author of VeroFORECAST. “The continued appreciation demonstrates the overall health of the real estate market, but it is important to note that this is just a slight increase from last quarter's national forecast, indicating much slowing in the forecasted rate of increase. Currently, most areas in the country are expected to see price appreciation with few areas forecast to show declines.” Fox added that the split is slightly over 90 percent for markets with appreciation compared to a bit under 10 percent in depreciation. “All markets in the top five now have strong appreciation forecasts, although they are weaker overall than last quarter's top markets, which topped at 15 percent. Moreover, although depreciating markets are still present, they are all exhibiting small depreciation trends such as -1 percent or -2 percent,” Fox noted. Projected Five Strongest Markets 1. San Francisco-Oakland-Fremont, CA +13.4 percent 2. San Jose-Sunnyvale-Santa Clara, CA +10.7 percent 3. Seattle-Tacoma-Bellevue, WA +10.2 percent 4. Los Angeles-Long Beach-Santa Ana, CA +9.6 percent 5. Midland, TX +9.5 percent Projected Five Weakest Markets 1. Atlantic City, NJ -1.7 percent 2. Kingston, NY -1.7 percent 3. Fayetteville, NC -1.3 percent 4. Norwich-New London, CT -1.2 percent 5. Rockford, IL -1.1 percent As in recent updates, VeroFORECAST finds that local population trends and unemployment rates remain the key drivers. The most populated metro areas are expected to perform the best in the next 12 months on average, and the least populated metro areas are forecast to perform the worst. For example, the average population of the top 50 metros is 2.4 million and the average population of the bottom 50 metros is 527,000, according to Fox’s VeroFORECAST findings. San Francisco’s unemployment rate is 6.3 percent and Seattle’s is 6.0 percent, compared to 7.3 percent nationally. Midland, Texas’ sturdy appreciation is fueled by its oil sector growth-influenced 3.2 percent unemployment rate and scant supply. All of the Top Five markets are showing high demand and low inventories. Phoenix dropped out of double-digit appreciation for the first time in more than nearly two years, but is expected to maintain healthy, single-digit appreciation.
Published
Jan 16, 2014
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