Veros: Housing Forecast Shows Emerging Geographical Polarization
Veros Real Estate Solutions, Santa Ana, Calif., said residential market values will continue their overall upward trend during the next 12 months, with overall annual forecast appreciation of 3.5 percent, on a par with previous forecasts.
The company’s VeroFORECAST reported eight of the top 10 markets in Colorado, Washington, Idaho and Oregon, with the Denver market leading the way with forecast appreciation of 10.8 percent, up from its fifth place position of 9.9 percent just three months ago. Additionally, the forecast noted 15 of the top 25 forecast markets were in these four states, which Veros Vice President of Statistical and Economic Modeling called “almost unprecedented.”
“In markets with this level of national appreciation it is most common to see a broad distribution of markets contributing to the rise,” says Eric Fox, vice president of statistical and economic modeling at Veros. “What is remarkable from where we stand today is the possible concentration risk when home price appreciation and market activity become highly clustered in only a few regional areas.”
The forecast noted all top 10 markets are forecast to be in the 9-11 percent range. Boulder (10.5 percent), Fort Collins (10.3 percent), Seattle (10.2 percent) and Boise City (9.7 percent) round out the top five markets. Fox said these markets are characterized by strong market fundamentals (low unemployment rates, growing populations and month’s supply of homes around 2.0 months or less).
The forecast noted the Bay Area, south Florida and the oil-economy markets in Texas as showing continued weakening from last quarter’s update. For example, Houston which showed forecast appreciation of 4.3 percent during last quarter’s update, is now down to only 2.4 percent forecast appreciation due to the decreased profitability in the oil sector. The Bay Area forecasts are now at the 6 percent range, down more than 1 percent from last quarter and likely due to home prices reaching a pinnacle, pushing buyers at the margins out of the market. South Florida markets (Miami, West Palm Beach and Naples) are show forecasts down by more than 1 percent from last quarter’s update. Market indicators pointing to shrinking foreign investors and vast crop of luxury condos in construction.
VeroFORECAST’s projections for the weakest markets with depreciation of 1-2 percent. The report’s weakest market is expected to be Atlantic City -2.4 percent depreciation. Others in the bottom five include Poughkeepsie, N.Y. (-2.3 percent), Cumberland, Md. (-1.7 percent), Longview, Texas (-1.5 percent) and Waterloo, Iowa (-1.3 percent).
“Even these worst-performing markets won’t perform that poorly,” Fox said.
