Veros: Home Valuation Forecast ‘Strongest in Two Years’
Veros Real Estate Solutions, Santa Ana, Calif., said residential market values should continue in a positive trajectory over the next 12 months, with overall annual appreciation rising to +3.6 percent from its Q2 forecast of 3.1 percent.
The VeroFORECAST said the number of markets expected to increase in value rose to 94 percent, from last quarter’s 90 percent. Eric Fox, vice president of statistical and economic modeling with Veros, said this is the strongest forecast appreciation that has been seen in nearly two years.
“The top forecast markets continue to show double-digit appreciation,” Fox said. “Top performing markets continue to confine themselves to California, Colorado, Florida, Washington, and Oregon. Florida is making a bit of a comeback and is buoyed by international buyers in many markets. Several Texas markets such as Dallas and Austin are still forecast to do well although there is definitely some weakening in markets impacted by the oil and gas industry such as Houston, Midland and Odessa.”
Veros said low housing supply, an influx of population and low unemployment rates continue to be common characteristics of the top forecast performing markets.
The forecast said although the next 12 months look to be strong and improving for the residential house price market, the longer time horizon shows some weakness. After a +3.6 percent for the next 12 months, is softens to +2.1 percent for months 13 to 24.
“The primary driver for this weakening is suspected tightening that the Fed will be doing which will likely cause mortgage interest rates to begin ticking upward,” Fox said. “We don’t see dramatic increases in interest rates. However, even a 25- or 50-basis point increase would be enough to cause consumers at the margin to drop out of the market to purchase a home, which will cause some softening overall. While we do see softening in the long-term, the overall market is still expected to appreciate. We don’t see a repeat of the last downturn in 2007.”
The forecast showed weakest markets primarily occur in the East, which has 23 of the bottom 25 markets. “The bottom forecast markets are still by and large in relatively small cities within the Eastern U.S. with poor economic conditions and general population declines often spanning decades,” Fox said. “The good news for these markets is that all are characterized by slight depreciation of no more than one- to two-percent.”
