- Veros says this is a significant drop from the 1.5% annual appreciation from the previous quarter.
- The forecast, however, says extreme depreciation is not expected.
Veros Real Estate Solutions anticipates home prices will turn negative overall and depreciate on average by 0.5% for the next 12 months, its first negative forecast in more than 10 years.
According to Veros’ 2022 Q4 VeroFORECAST, a quarterly report evaluating home prices in over 300 metropolitan areas, the negative forecast is a significant drop from the 1.5% annual appreciation it forecast just one quarter ago.
“The last time that the annual forecast was expected to be negative was in 2012, following the aftermath of the previous housing market crash,” said Eric Fox, chief economist at Veros. “Though average depreciation is expected now, the fundamentals of the U.S. housing market in 2023 are much better than they were a decade ago. This is not going to be a repeat of what we saw in 2007-2008.”
The forecast says extreme depreciation is not expected at this time, though the softening market is a sharp contrast to what has been experienced in the previous couple of years.
The number of markets expected to have annual depreciation has grown from a few dozen during last quarter’s update to nearly half of the markets in this update. The report says many of them are forecasted to have only mild depreciation of just a percent or two.
“Interestingly, many markets which were the big housing market winners of the past year or two are now forecast to be some of the worst-performers, including San Francisco; Seattle; Austin (Texas); Boise (Idaho); San Jose, and Las Vegas.” Fox continued. “These markets are all expecting depreciation over the next 12 months, which will range from -5% to -7%”
Veros predicts many markets should do reasonably well with low, single-digit rates of appreciation. North Carolina has five markets in the Top 10; two middle-of-the-country markets — Wichita, Kan., and Lincoln, Neb. — are again in the Top 5. Even the Fort Myers area of Florida, hit hard by Hurricane Ian, rocketed into the Top 5 markets in the country due to large demand and limited supply.