Veros: Home Price Appreciation to Dip Below 4%

Veros Real Estate Solutions, Burlingame, Calif., predicts “significant slowing” of home prices in most markets through 2019.

The fourth quarter VeroFORECAST sees average appreciation of 3.9 percent in the survey’s 100 most populous markets, a nearly half-percent drop from the 4.5 percent average of the top 100 markets from September.

“This amount of change from one quarter to the next is significant,” said Eric Fox, Vice President of Statistical and Economic Modeling with Veros. “While the market fundamentals remain solid and we still expect the overall housing market to remain healthy, there is a definite slowing down of most markets from last quarter’s update.”

The forecasat shows the top and bottom 10 markets are now dominated by small to modest-sized cities with an average population of 260,000. All of the Top Ten markets for market appreciation are west of the Mississippi, this time in just four states: Idaho, Washington, Texas and Colorado:

1. Boise, Idaho (9.5%)
2. Olympia, Wash. (8.8%)
3. Midland, Texas (8.7%)
4. Idaho Falls, Idaho (8.6%)
5. Odessa, Texas (8.4%)
6. Pocatello, Idaho (8.2%)
7. Bellingham, Wash. (8.2%)
8. Mount Vernon, Wash. (7.8%)
9. Boulder, Colo. (7.7%)
10. Grand Junction, Colo. (7.5%)

Veros said the predicted appreciation rates for these MSAs now range from 7.5 to 9.5 percent compared to the last report’s top-10 range of 9.3 to 11.7 percent, an average drop in appreciation of two full points from 10.3 to 8.3 percent.

Other MSAs in Nevada and California fell out of the top 10. Other areas appreciating at lower rates are previous hotspots of Denver, Las Vegas, Reno and Dallas, with Manhattan and its surrounding New York market forecast to appreciate at just 1 percent for the next 12 months. Veros also sees lower predictions for Utah, including Salt Lake City.

“California is softening overall,” Fox said. “In Southern California, particularly, we expect Los Angeles, Ventura, Orange, Riverside, and San Diego Counties to appreciate less than five percent over the next year.”

“We do not see a crash,” Fox added, “but simply a slowing down as the strength of the past few years is expected to dissipate somewhat in most markets.”

At the bottom end of the report, Veros said the number of depreciating markets has increased from 3 to 5 percent since last quarter’s update, which means 18 markets, twice as many as in the third-quarter 2018 report, are predicted to depreciate through December 1, The projected range for appreciation in those Bottom Ten markets is -2.6 to -0.4 percent, for an average of -.92 percent compared to the last report’s comparable average.

Bottom 10 market include:

1. Farmington, New Mexico (-2.6%)
2. Danville, Ill. (-1.4%)
3. Decatur, Ill. (-1.0%)
4. Peoria, Ill. (-1.0%)
5. Grand Forks, N.D. (-0.8%)
6. Springfield, Ill. (-0.6%)
7. Cumberland, Md. (-0.5%)
8. Shreveport, La. (-0.5%)
9. Lafayette, La. (-0.4%)
10. Bridgeport, Conn. (-0.4%)

“Either slow population growth or population declines are contributing to low demand in these areas and many of the bottom 10 markets in this quarter’s report are in very slow growth metros,” Fox said. “This, in conjunction with upward interest rate pressure, is causing these markets to be soft.”

The report is based on data from 359 metro areas, including 13,870 zip codes and 1,004 counties for a total coverage of the residences of 82 percent of the U.S. population.