A new report from Veros Real Estate Solutions (Veros) predicts that 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. According to the VeroFORECAST for first quarter 2019, this continues a projected slowing that first appeared in the previous quarter’s report.
Among the states where predictions raise concern are Louisiana, which has half of the ten markets at the bottom of the report’s 100 most-populous markets, and California. The Golden State is expected to continue softening significantly with forecast appreciation for both the Los Angeles and San Diego markets falling well under five percent. The Bay Area is expected to fare only slightly better, with appreciation just above five percent, well below its double-digit readings in the recent past.
Other states where VeroFORECAST projects depreciation or significantly lower appreciation are Illinois, Connecticut, Utah, North Dakota, and Southwest Florida, as well as many New York City boroughs and the major Texas markets of Dallas-Ft. Worth and Houston.
Veros, an award-winning industry leader in enterprise risk management, collateral valuation services and predictive analytics, provides these quarterly VeroFORECAST reports by subscription to its clients and in a summary overview to industry media. The current report is based on data from 349 Metropolitan Statistical Areas (MSAs), which include 13,545 zip codes, 984 counties, and represent 82 percent of U.S. residents.
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 and now to +3.7 percent for this quarter. Although this is a big decline over such a short period of time, it is not cataclysmic.
While the further drop is seen as “significant,” according to Eric Fox, Veros VP of Statistical and Economic Modeling and the report’s author, he cautions it does not signal an impending crash.
“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 adds, “The strength of the past few years is expected to dissipate somewhat in most markets.”