Veros: West Leads Overall Housing Market Strength

Veros Real Estate Solutions, Santa Ana, Calif., said residential market values should continue their overall upward trends during the next 12 months, with overall annual forecast appreciation of +3.7 percent.

The company’s VeroFORECAST said the forecast came in slightly higher than the previous quarter (3.5 percent), with just 5 percent of markets expected to depreciate.

The forecast “is still showing general market strength for the overall U.S. residential real estate market with continued strength in the West and relative weakness in the Northeast,” said Eric Fox, Vice President of Statistical and Economic Modeling with Veros. “Eighteen of the top 25 markets are exclusively in the Western states of Washington, Oregon, Colorado, Arizona, Idaho and Utah. Five more are in the state of Florida. These markets are all characterized by where people want to live and where population is migrating.”

Veros said the Seattle market remains strong with a supply of homes at an extremely low 1.0 month and its population continuing to grow rapidly. Its unemployment is just 3.7% (compared to a national rate of 4.3%). Denver also continues to show a tightening of home supplies at 1.1 months. Combined with an unemployment rate of just 2.1% and rapid population growth, “this is one of the forecast’s strongest markets in the country,” Fox said.

“As job growth continues to drive migration to the top markets, we will continue to see tight home supplies, causing a heightened housing demand which as we know will cause home affordability to suffer in these areas,” Fox said.

The report said 13 of the bottom 25 markets are exclusively in states in the Northeast/Mid-Atlantic, including New Jersey, New York, Connecticut, West Virginia, Pennsylvania and Ohio. Atlantic City is forecast to be the worst performing market over the next year with 3.0% depreciation expected.

“Many of these markets are characterized by consistent population declines–often over decades,” Fox said. “Connecticut and New Jersey look particularly weak. But, this does not mean every Northeastern market will fare poorly. In New York, Queens and Brooklyn (Kings Co.) are expected to do very well.”

The forecast also expects some formerly hot markets to begin to cool off. It noted Austin, Texas, where forecast appreciation is expected to drop into the 6% range after consistently having double-digit appreciation.