Veros Real Estate Solutions, an industry leader in enterprise risk management and collateral valuation services, announced that Q4 2019 VeroFORECAST™ data indicates an average projected appreciation rate for residential real estate in the nation’s Largest 100 Housing Markets will be up 3.9% for the year ending December 31, 2020. This forecast is slightly higher than the rate predicted in the first three quarters of 2019, closing the year with moderate home-price growth.
“VeroFORECAST reveals an average increase of 3.9% by the fourth quarter of 2020,” said Eric Fox, Veros vice president of Statistical and Economic Modeling. “The sound fundamentals of the economy, low interest rates and strong levels of employment should result in moderate home-price appreciation with very few geographic pockets of weakness.”
The 10 markets forecasted to increase the most between Q4 2019 and Q4 2020 are primarily located in the Pacific Northwest (Washington, Oregon and Idaho) and the West (Arizona and Utah), with one outlier in Georgia. The defining factor in the strongest markets is a very low housing supply which is forcing prices to increase much more rapidly than in other markets.
Markets with depreciation are almost non-existent compared to previous quarters. According to the VeroFORECAST for Q4 2020, only Monroe, Louisiana, is expected to decline. Connecticut has three cities in the bottom group, Illinois also has three, California has two, and one metropolitan area in Alabama rounds out the 10 least-performing markets.
In this quarter, it appears that the $10K-cap on the State and Local tax deduction (SALT) has softened markets where these taxes are high and growth is stagnant such as New York, New Jersey and Connecticut. California, also hampered by SALT and has seen some recent out-migration, continues to struggle compared to the years when home prices there were growing by double-digit percentages year over year.
Although Hurricane Florence, a Category 4 storm, made landfall in North Carolina in September 2018 causing significant freshwater flooding, two years later, several markets in North Carolina are expected to be solid performers and should experience above-average appreciation by December 2020.