About 80% of the nation’s real estate markets are projected to appreciate in value over the next 12 months, according to a recent forecast by Veros Real Estate Solutions. But while some markets are slated for strong growth in the year ahead, others are expected to be weak links.
A firm that provides enterprise risk management, collateral valuation services and predictive analytics, Veros projects that while a vast majority of housing markets are projected to experience value gains, 20% of markets will depreciate over the next year.
Northern California metro areas lead the county, while markets in parts of Illinois, New Jersey and Pennsylvania are forecast to be among the poorest performers.
Some areas, like San Jose and San Francisco, are seeing a “serious housing shortage,” said Eric Fox, 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, ” he said in a statement. “There just aren’t enough houses available that people can afford to buy, so those that remain are hotly contested.”
The San Jose-Sunnyvale-Santa Clara, CA market is projected to be the strongest for housing appreciation over the next 12 months, with an anticipated 10.6% increase in homes values, according to VeroFORECAST.
The market is followed closely by the San Francisco-Oakland-Fremont metro area, which has a growth projection of 10.5%.
Rounding out the top-five strongest project markets are Texas’ Austin-Round Rock metro (10%), San Diego-Carlsbad-San Marcos, CA (9%) and Houston-Sugar Land-Baytown (8.9%) markets.
On the opposite end of the spectrum are those markets that have seen “slight softening,” Veros notes, and are projected to be the weakest in terms of home value appreciation.
Rockford, IL (-3.4%); Trenton-Ewing, NJ (-2.9%); Scranton-Wilkes-Barre, PA (-2.6%); Poughkeepsie-Newburgh-Middletown, NY (-2.5%) and Atlantic City, NJ (-2.2%) are among the weakest markets nationwide projected for home value declines over the next year, according to VeroFORECAST’s data.
For a market like Rockford, which has surpassed Atlantic City in this year’s projections compared to last year, the main culprit is its 10.4 percent unemployment rate coupled with a flat population growth trend, Fox stated.
“These are familiar and persistent themes among the weakest markets,” he said. “In summary, we are still seeing good appreciation in the top markets, but there is definite slowing overall.”
On average for the top 100 metro areas, Veros expects 2.5% appreciation over the next 12 months, down from last quarter’s 3.4% forecast, according to Veros’ future home price index (HPI).
While this is the eight consecutive quarter where the HPI has shown price appreciation, the pace has continued to slow down, Fox noted.
Written by Jason Oliva
