VeroFORECASTSM showing overall strength with just 10% of markets seeing depreciation in next 12 months
SANTA ANA, Calif.–Veros Real Estate Solutions (Veros) reports residential market values will continue their overall upward trend during the next 12 months, with overall annual forecast appreciation of +3.5% which is constant from last quarter’s forecast. This insight comes from the company’s most recent VeroFORECAST, a national real estate market forecast for the 12-month period ending September 1, 2017.
VeroFORECAST found 8 of the top 10 markets to be in Colorado, Washington, Idaho, and Oregon, with the Denver market leading the way with forecast appreciation of +10.8%, up from its fifth place position of 9.9% just three months ago. Strikingly, 15 of the top 25 forecast markets were confined to these four states which is 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.”
All top 10 markets are forecast to be in the 9% to 11% range. Boulder (+10.5%), Fort Collins (+10.3%), Seattle (+10.2%), and Boise City (+9.7%) round out the top 5 markets. These sizzling markets are characterized by strong market fundamentals (low unemployment rates, growing populations, and month’s supply of homes around 2.0 months or less).
This VeroFORECAST release singles out 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% during last quarter’s update, is now down to only 2.4% forecast appreciation due to the decreased profitability in the oil sector. The Bay Area forecasts are now at the 6% range, down over 1% 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 also showing forecasts which are down over 1% from last quarter’s update. Market indicators point to shrinking foreign investors and a vast crop of luxury condos in construction.
VeroFORECAST’s projections for the weakest markets are showing depreciation around 1% or 2%. “Even these worst-performing markets won’t perform that poorly,” says Fox. The report’s weakest market is expected to be Atlantic City with forecast 2.4% depreciation. Others in the bottom five include Poughkeepsie, NY (-2.3%), Cumberland, MD (-1.7%), Longview, TX (-1.5%), and Waterloo, IA (-1.3%). Similar to the best-performing markets being confined to a small geographic area, this quarter’s report shows 20 of the 25 bottom performing markets are in New Jersey, Connecticut, West Virginia, the Hudson Valley region of New York, and the oil-based economies of Texas and Oklahoma.
“This type of concentration is a highly unique phenomenon,” comments Fox. “In the 13 years that VeroFORECAST has been accurately producing forecasts we have never seen such strong geographic polarization.”
Additional forecasts for U.S. markets available upon request.
About Veros Real Estate Solutions
Mortgage technology innovators since 2001, Veros is a proven leader in enterprise risk management and collateral valuation services. The firm combines the power of predictive technology, data analytics, and industry expertise to deliver advanced automated solutions that control risk and increase profits throughout the mortgage industry, from loan origination to servicing and securitization. Veros’ services include automated valuation, fraud and risk detection, portfolio analysis, forecasting, and next-generation collateral risk management platforms. For more information, visit www.veros.com or call 866-458-3767.
About Eric Fox, VP of Statistical and Economic Modeling
Eric Fox received his M.S. in Statistics and B.S. in Mathematics and Economics from Purdue University, and has more than 22 years of industrial experience in statistical and econometric modeling, probabilistic life methodology development, statistical training, probabilistic design software development, and probabilistic financial/competitive analysis. Fox has published more than 20 technical papers on probabilistic and statistical methods.