Veros: Continued Slowing in Top 100 Housing Markets
Veros Real Estate Solutions, Santa Ana, Calif., said annual home price appreciation in the top 100 U.S. housing markets will continue to slow over the year.
The company’s first quarter VeroFORECAST said properties in the nation’s 100 largest markets will appreciate at a rate of 3.7 percent over the 12 months ending March 1, 2020. After a steady rise over many quarters, the forecast has come down from +4.5 percent six months ago to +3.9 percent last quarter.
Among states that raise concern are Louisiana, which has half of the 10 markets at the bottom of the report’s 100 most-populous markets; and California, which is expected to continue softening significantly with forecast appreciation for both the Los Angeles and San Diego markets falling well under 5 percent. The Bay Area is expected to fare only slightly better, with appreciation just above 5 percent, well below its double-digit readings in the recent past.
Other states where VeroFORECAST projects depreciation or significantly lower appreciation include Illinois, Connecticut, Utah, North Dakota and Florida, as well as many New York City boroughs and major Texas markets Dallas-Ft. Worth and Houston.
Eric Fox, Vice President of Statistical and Economic Modeling with Veros, noted although this is a big decline over such a short period, it is not cataclysmic.
“We do not see a significant depreciation,” Fox said, “but simply a slowing down of most markets. The overall housing market is still expected to remain healthy as the fundamentals remain solid including historically low interest rates and a strong economy with low unemployment rates.”
Nevertheless, he noted the strength of the past few years “is expected to dissipate somewhat in most markets.”
Veros said both the top and bottom ten are dominated by small-to-modest-sized cities, with one anomaly in each list: Phoenix, the nation’s fifth largest city, joined the Top 10 while Hartford, with an estimated 2018 population of 1.2 million, joined one smaller Connecticut market in the bottom 10.
The Top Ten have an average forecasted appreciation of 7.82 percent, off a half percentage point from last quarter’s 8.32 percent Top Ten average, with six of the current Top Ten MSAs continuing from last quarter’s report. However, while the top two of those six–Idaho Falls and Odessa, Texas–rose by 1.6 and .36 percent respectively, the other four are down slightly from last time.
Veros said depreciating markets remain at 5 percent of all forecast markets. Like Louisiana’s forecast to do poorly statewide, Illinois and Connecticut, which each contribute two markets to the bottom 10, are projected to do uniformly poorly. The depreciation rates, however, are less than -0.2 percent, with the average of the bottom 10 depreciating markets up from -0.92 percent in the previous quarter’s forecast to -0.76 percent.
Texas is forecast to have continuing softening for major markets such as Dallas-Ft. Worth and Houston, with the latter forecast to have just 1.8 percent appreciation. Dallas-Ft. Worth, on the other hand, is expected to perform somewhat better. Oil-rich locales of Odessa and Midland, with their hold on spots in the Top 10, are notable exceptions.
Veros said a majority of New York City boroughs are now driving softening of the New York metro area to lower projected rates of appreciation, with Queens expected to have low single-digit appreciation. Manhattan, on the other hand, is expected to have low single-digit depreciation.
Other areas showing weakness are Utah, North Dakota, and Southwest Florida, where the markets of Cape Coral, Ft. Myers, and Naples all forecast to be in the low single digits of appreciation.
