20% of nation’s homes are now losing value
Where are the strongest and weakest markets going forward?
The nation’s home prices are still on the rise, but the rate of growth is slowing considerably. According to VeroFORECAST from Veros Real Estate Solutions, home prices are expected to rise 2.5% in the nation’s 100 top metro areas between now and June 1, 2015.
That’s down from the last VeroFORECAST, released in May, which projected homes to appreciate by 3.4% for the 12-month period ending March 31, 2015.
This marks the eighth consecutive quarter where the index has shown forecast appreciation, but the pace has continued to slow down, according to Eric Fox, Veros’ vice president of statistical and economic modeling and developer of VeroFORECAST.
In Veros’ previous forecast, the rate of home price appreciation dropped to 3.4% from 5.1% in the previous quarter.
According to Veros’ data, homes in approximately 80% of the country’s real estate markets are expected to appreciate in value in the next 12 months. The remaining 20% of the markets are expected to depreciate in the next 12 months.
Additionally, all but the most upbeat markets are slowing in their value improvements, Veros said.
All five of the markets that Veros projects to the strongest in terms of price appreciation over the next 12 months are in either California or Texas.
“San Jose housing supplies are down and San Francisco is seeing a serious housing shortage,” Fox said. “Inventories in both are down 70% 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.”
Here are the five markets that Veros thinks will appreciate the most in the next year:
1. San Jose-Sunnyvale-Santa Clara, California – 10.6% increase
2. San Francisco-Oakland-Fremont, CA – 10.5% increase
3. Austin-Round Rock, Texas –10% increase
4. San Diego-Carlsbad-San Marcos, CA – 9% increase
5. Houston-Sugar Land-Baytown, TX – 8.9% increase
On the other end of the spectrum, markets in parts of Illinois, New Jersey and Pennsylvania are forecast to be among the poorest performers. Here are the five markets that Veros expects appreciation to be the weakeast in the next year:
1. Rockford, Illinois – 3.4% decrease
2. Trenton-Ewing, New Jersey – 2.9% decrease
3. Scranton-Wilkes-Barre, Pennsylvania – 2.6% decrease
4. Poughkeepsie- Newburgh-Middletown, New York – 2.5% decrease
5. Atlantic City, NJ – 2.2% decrease
In the previous quarter’s update, the weakest market, Atlantic City, tracked at -2.5%, faring better than this quarter’s weakest, Rockford, Illinois, at -3.4%.
“Rockford real estate is experiencing hard times, going from -2.6% to -3.4% in a single quarter,” Fox said. “The culprit is its 10.4% 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.”