Now 83% of Housing Markets Have Forecast for Price Growth

As the housing market makes serious strides toward recovery, that progress is marked by the continued performance of individual metros nationwide. And now, 83% of these markets have a favorable outlook for home price appreciation over the next year, according to the latest predictive analytics from Veros Real Estate Solutions.

Veros, which also provides risk management and collateral valuation services, says in its latest 12-month forecast that the percentage of markets expected to increase in value has grown to 83% from last quarter’s 80%. In another measured improvement from the previous quarter, Veros also found an accompanying decrease in the last quarter’s depreciating markets from 20% to 17%.

The insight is product of the company’s most recent VeroFORECAST, a national real estate market predictor for the 12-month period ending September 1, 2015. Updated quarterly, the system covers 1,026 counties, 352 metros and 13,904 zip codes.

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While the national forecast anticipates 2.4% annual appreciation, VeroFORECAST expects a rate of 2.5% for the country overall. And although this recent reading marks the ninth consecutive quarter in which the index has shown forecast appreciation, the pace has continued to slow down. 

The trend is mostly about housing supply, says Eric Fox, Veros’ vice president of statistical and economic modeling and developer of VeroFORECAST.

“Not unexpectedly, prices will rise where supplies are low,” he said in a written statement. “In the bottom forecast markets, declining population trends are a key variable for the sixth straight quarter. Populations follow jobs, and housing supplies are often slow to keep pace with demand supported by increased employment for a variety of reasons.”

Unofficially, the demarcation between the top-25 best and weakest forecasted markets appears to be the Mississippi River, according to Fox.

“All of the Top 25 markets are west of the Mississippi and, with the exception of Hot Springs, Arkansas, the entire Bottom 25 group is found east of the river,” said Fox in a written statement. “Of course, that does not mean that all of the markets in the west are appreciating, nor does it mean all those in the east are experiencing depreciation.”

Among the strongest forecasted markets for price appreciation over the next 12 months are Victoria, TX (9.8%); Houston-Sugar Land-Baytown, TX (9.7%); San Jose-Sunnyvale-Santa Clara (9.6%); Austin-Round Rock, TX (9.5%) and San Francisco-Oakland-Fremont, CA (9.4%).

At the opposite end of the spectrum, the weakest markets projected for declines include Atlantic City, NJ (3.3%); Sheboygan, WI (2.7%); Lima, OH (2.4%); Jacksonville, NC (2.3%); and Fond Du Lac, WI (2.3%). 

View Vero’s top strongest and weakest forecasted markets. 

Written by Jason Oliva

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  • Did anyone really not expect the SF Bay Area not to be at the top of high appreciation growth areas? With a new President, one might find DC at the top of that list in 2017 but not now. Then there is central and southeast Texas, where oil, gas, and technology drive economic growth.

    But as expected every community listed is west of the Mississippi River. Those communities expected to do the worst are east of the Mississippi River.

    Yet, a 2.4% to 2.5% national growth rate will not bring back Standards. It strongly reinforces the need to reduce principal limit factors as HUD did on September 30, 2013; however, with higher ongoing MIP and generally much lower proportionate initial unpaid balances at funding, was a 15% cut overkill? It will be interesting to see how tails play into the projected net position of the MMI Fund. In other words will the actuaries treat the remaining lines of credit as if they (and the year’s growth) are fully drawn at the beginning of the next year? Actuarial assumptions will become an even greater part in the predicted net position of the MMI Fund.

    The reduced revenue problem last fiscal year strictly from the 60% disbursements limitation should be greatly improved this fiscal year as borrowers begin drawing down their remaining lines of credit created last fiscal year due to the disbursements limitations. The great thing for most lenders is that they have no burden for origination compensation on any part of those tails. Tails will become an even greater profit center for non-TPO lenders. Will this lead to pressure on borrowers to take their remaining proceeds from these lenders? At least this is one thing that TPO brokers cannot be accused of promoting.

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