Top Markets Poised for 10%-Plus Home Price Growth

Veros Real Estate Solutions, Santa Ana, Calif., said many top housing markets could see annual home price growth in excess of 10 percent over the next 12 months.

The company’s VeroFORECAST projects residential market values continuing to appreciate at an overall national average of 4.3 percent, a tenth of a percent increase over predictions made in the fourth quarter and more than a half-percent above predictions made a year ago.

“The overall U.S. residential real estate market will continue to rise, and rise at a slightly higher rate,” said Eric Fox, Vice President of Statistical and Economic Modeling with Veros. He noted this marks the 23rd consecutive quarter with forecast appreciation.

The report said the 97%-3% split between appreciating and depreciating metro areas over the next 12 months remains unchanged from the last update, suggesting consistency in nearly every metro market.

Washington metros dominate the top ten again; however, Denver cracked the top five this past quarter. Top metros include Seattle (11.1 percent); Bellingham, Wash. (10.1 percent); Kennewick, Wash. (10.0 percent); Denver (9.9 percent) and Mount Vernon-Anacortes, Wash. (9.9 percent).

“Seattle, in particular, continues to be a popular choice for residents coming from more expensive markets in California,” said Economist Matthew Gardner, with Seattle-based Windermere Real Estate. “In Seattle and the other Washington State metro areas that made this list, the supply of new construction homes is very limited, which puts additional pressure on existing home prices.”

“The Seattle market remains exceedingly strong due to its extremely low supply of homes, which is at just one month inventory, and a population that grew 22% over the last 15 years,” Fox said. “Its unemployment rate of 4.5% is slightly higher than the national rate of 4.1%. In Denver, however, where inventory is only slightly better at around 1.4 months, the unemployment rate is an extremely low 2.9% amid rapid population growth.”

Other hot markets in the top 10: Midland, Texas and Bremerton, Wash. (both at 9.5 percent); Vallejo, Calif. (9.4 percent); Eugene, Ore. (9.1 percent); and Reno-Sparks, Nev. (9.0 percent).

All but two of the top 25 markets are west of the Mississippi River, with 18 of the bottom 25 markets are east of the Mississippi. “Many of the markets in the bottom five are in very slow-growth metros,” Fox said.

Metro areas projected to have the worst depreciation over the next 12 are Atlantic City, N.J. (-2.9 percent); Joplin, Mo. (-1.4 percent); Goldsboro, N.C. (-1.1 percent); Longview, Texas (-0.8 percent); and Peoria, Ill (-0.6 percent).

“Atlantic City demand remains so low because the population has been declining for decades,” Fox said. “Unemployment is high at 6.4 percent, a full two-and-a-half percentage points above the national average. Supply is around nine months and continues to rise. Peoria’s sluggish forecast is due to relatively flat population growth over the past decade and an unemployment rate of 4.6 percent.”