Just as America's population growth moved west from the Atlantic, real estate appreciation is trending in that direction, too. According to projections within the 2nd Quarter 2018 VeroFORECAST released last month, a graph of the nation's highest-appreciating Metropolitan Statistical Areas through May 2019 might look like a wave cresting towards the West Coast.

The report from Veros Real Estate Solutions predicts that, while U.S. residential real estate will rise at a national average of +4.4% over the next 12 months, a tenth-of-a-percent uptick over the previous quarter's report, the top markets are all between +9.1% and +11.1% – and all between the Rockies and the Pacific.

Six of those 10 MSAs are in Washington State and Nevada, which is starting to come back strongly. Although Las Vegas has dropped out of the top 10, the Carson City MSA has leapt in and the Reno-Sparks market leapt up from tenth to sixth. Both now are predicted to have average property appreciation of 9.5%. The rest of the top 10 markets are in Oregon, Idaho and California, where the Bay Area occupies two spots. Add in Utah and Colorado and you have 21 of the top 25 markets.

1. Seattle-Tacoma-Bellevue, Washington (+11.1%)
2. Olympia, Washington (+9.8%)
3. Bremerton-Silverdale, Washington (+9.8%)
4. San Jose-Sunnyvale-Santa Clara, California (+9.5%)
5. Carson City, Nevada (+9.5%)
6. Reno-Sparks, Nevada (+9.5%)
7. Mount Vernon-Anacortes, Washington (+9.4%)
8. Pocatello, Idaho (+9.4%)
9. San Francisco-Oakland-Fremont, California (+9.2%)
10. Eugene-Springfield, Oregon (+9.1%)

Further evidence of the geographic tilt to rising and falling values is that the nine markets predicted to depreciate are primarily in the East and South.

Looking at the very top markets, the three highest-appreciating MSAs through May 2019 are expected to be Washington's Seattle-Tacoma-Bellevue, with a predicted rate of 11.1% (unchanged from first quarter 2018), and Olympia and Bremerton-Silverdale, both at +9.8%. Washington-based economist Matthew Gardner, of Windermere Real Estate, attributes this strength to “a thriving economy and a lack of buildable land.” He adds that the in-migration of technology workers is helping fuel the growing demand for housing.

KEY PREDICTORS

The forecast is created by determining how certain key predictors will impact real estate, at six, 12, 18 and 24-month horizons. This latest report used data from 354 MSAs, 1,005 counties, and 13,877 ZIP codes, an increase across all categories from the previous report. These residences in these markets house 82% of the U.S. population. In the case of ZIP code and county coverage, results are further broken down into low, medium, and high price tiers for both SFRs and condos/townhouses.

Housing supply and population trends continue to be the chief indicators of where a market will sit on the nation's appreciation-depreciation continuum. In the top markets the housing supply is very low, so prices are expected to increase significantly. Population affects performance with the demand factor, and in the top 25 metros, the average population is 1.7 million while the average population of the bottom 25 metros is 318,000.

Those designations are further stratified between single-family residences and condominium/townhomes, and three price tiers – below the 25th percentile, the 25th through 75th percentiles, and above the 75th percentile – at the county and ZIP code levels and are used to add greater granularity.