Veros says that the residential real estate market has crested after almost two straight years of rapidly increasing appreciation. This insight is from the company’s VeroFORECAST national real estate market forecast for the 12-month period ending March 31, 2015, updated quarterly and covering more than 1,000 counties, 345 metro areas, and 13,770 zip codes.
Veros’ future home price index (HPI) forecast indicates that, on average for the top 100 metro areas, Veros expects 3.4 percent appreciation over the next 12 months, down from last quarter’s 5.1 percent forecast, which may very well have been the peak for the national outlook. This is the seventh consecutive quarter where the index has shown forecast appreciation. While the market is expected to be healthy overall, the level of forecast appreciation is definitely slowing, according to Eric Fox, Veros’ vice president of statistical and economic modeling and developer of VeroFORECAST.
“The wave of appreciation may have crested, but it has been an impressive recovery in many respects,” says Fox. “The market is stabilizing and the overall outlook is very positive,” he notes. “However, we won’t see the rapid gains we have experienced in prior quarters. Those days appear to be behind us for the foreseeable future.”
The stabilizing trend is expected to last over the next two years, Fox adds. “We are seeing continued signs that a year or two from now the rapid increase of prices will slow in many parts of the country. Importantly, we don’t foresee drastic slowing – simply some moderation. The primary reason for some slowing in the 13 to 24 month range is due to expected higher interest rates and somewhat lower affordability,” he explains. “The average national forecast for the next 12 months is 3.4 percent, and the average forecast for the following 12 months (months 13-24) is only 2.0 percent,” Fox says.
Projected Five Strongest Markets
1. San Jose-Sunnyvale-Santa Clara, CA +9.7%
2. Los Angeles-Long Beach-Santa Ana, CA +9.3%
3. Midland, TX +9.3%
4. Bismark, ND +9.1%
5. San Francisco-Oakland-Fremont, CA +8.8%
Projected Five Weakest Markets
1. Atlantic City, NJ -2.5%
2. Norwich-New London, CT -1.7%
3. Fayetteville, NC -1.6%
4. Rockford, IL -1.6%
5. Winston-Salem, NC -1.6%