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Continued Slowing In Top 100 Housing Markets

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. 


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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.


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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.


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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.


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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.”

Veros: Home Appreciation To Dip Through November

According to a new forecast of nationwide residential real estate values predicts significant slowing in most markets through 2019. The 2018 VeroFORECAST is the latest 12-month forecast from Veros Real EstateSolutions (Veros), an award-winning industry leader in enterprise risk management, collateral valuation services and predictive analytics.


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The new report forecasts average appreciation of 3.9 percent in the survey’s 100 most populous markets, which is more than a half-percent drop from the 4.5 percent average of the top 100 markets in the previous quarterly report released last September.


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The drop is reflected throughout the latest report’s projections, which are based on data from 359 Metropolitan Statistical Areas (MSAs). These MSAs include 13,870 zip codes and 1,004 counties for a total coverage of the residences of 82 percent of the U.S.population.


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“This amount of change from one quarter to the next is significant,” said Eric Fox, VP of Statistical and Economic Modeling at Veros and the report’s author. “While the market fundamentals remain solid and we still expect the overall housing market to remain healthy, there is a definite slowing down of most markets from last quarter’supdate.”


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“Wedonotseeacrash,”Foxcautioned,”butsimplyaslowingdownasthestrengthofthepastfewyearsisexpectedto dissipate somewhat in mostmarkets.”

With the economy strong and unemployment continuing to drop, the report points to housing supply and interest rates as the key contributors to the softening.”Overall, interest rates appear to be softening the forecasts in many markets by one-to-two percent over what they wouldhavebeen hadtheflatinterestrateenvironmentcontinuedasithasforthepastseveralyears,”Foxsaid.”Atthe same time, housing supply is a key discriminator between our top and bottom forecast performingmarkets.”

Veros Data Predicts A Market Dip This Year

A new forecast of nationwide residential real estate values predicts significant slowing in most markets through 2019. The fourth quarter 2018 VeroFORECAST is the latest 12-month forecast from Veros Real Estate Solutions (Veros), an award-winning industry leader in enterprise risk management, collateral valuation services and predictive analytics.


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The new report forecasts average appreciation of 3.9 percent in the survey’s 100 most populous markets, which is more than a half-percent drop from the 4.5 percent average of the top 100 markets in the previous quarterly report released last September.


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The drop is reflected throughout the latest report’s projections, which are based on data from 359 Metropolitan Statistical Areas (MSAs). These MSAs include 13,870 zip codes and 1,004 counties for a total coverage of the residences of 82 percent of the U.S.population.


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“This amount of change from one quarter to the next is significant,”said Eric Fox, VP of Statistical and Economic Modeling at Veros and the report’s author. “While the market fundamentals remain solid and we still expect the overall housing market to remain healthy, there is a definite slowing down of most markets from last quarter’supdate.”


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“We do not see a crash,” Fox cautioned, “but simply a slowing down as the strength of the past few years is expected to dissipate somewhat in most markets.”

With the economy strong and unemployment continuing to drop, the report points to housing supply and interest rates as the key contributors to the softening.”Overall, interest rates appear to be softening the forecasts in many markets by one-to-two percent over what they would have been had the flat interest rate environment continued as it has for the past several years,” Fox said.”At the same time, housing supply is a key discriminator between our top and bottom forecast performing markets.”

Home Appreciation Continues

Veros has released its third quarter 2018 VeroFORECAST with predictions of how property values in Metropolitan Statistical Areas (MSAs) across the nation will fare between September 1, 2018 and September 1, 2019. 


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“Our latest VeroFORECAST indicates that on average, for the top 100 most populated metro areas, we expect 4.5% appreciation over the next 12 months,” said Eric Fox, VP of Statistical and Economic Modeling at Veros. “This is the 25th quarter in a row where this index has forecast overall appreciation. We are forecasting that the overwhelming number of metros across the nation, approximately 97 percent, will appreciate, with just three percent depreciating during this period. The fact that these averages are identical to those of last quarter’s update indicates that we are seeing consistency in nearly every metro market.”  


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Western states continue to hold all top ten spots, with forecast appreciation rates running roughly between nine and 12 percent. Seven of those MSAs with the highest-projected appreciation are in Washington and Nevada, with the other three in Idaho, California and Colorado. Another Western state, Utah, is also projected to be a solid performer. These five states, along with Oregon, have provided the index’s highest-ranked markets throughout 2018. It is an indication of the changing economy of Idaho that, after being represented in the year’s first two quarterly reports by Pocatello, Idaho, with a population of approximately 83,000, we now see the Boise City-Nampa MSA, with more than a third of the state’s population, moving in at 11.2 percent, VeroFORECAST’s second-highest projected appreciation figure.


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“This is a very strong showing, with the average appreciation of the Top 10 markets forecast to be a half-percentage point higher than in our last report,” Fox said. He added that, from an overall perspective, the latest report signals “more of the same” for property values in these markets.  Furthermore, for many of the markets for which data was analyzed, interest rates appear to be softening this quarter’s forecasts by one to two percent over what they would have been had the flat interest rate environment of the past several years continued.

Despite the Western MSAs’ domination of projected U.S. real estate appreciation, there are bright spots in every region. In the South, North Carolina is projected to perform well, as are the 

Midwest states of Michigan and Indiana, especially the Indianapolis-Carmel, IN MSA, where property values are projected to appreciate at 8.5 percent. 

Indiana’s next door neighbor, Illinois, however, is forecast to do very poorly, with three of its MSAs in VeroFORECAST’s Bottom 10: Bloomington-Normal is forecast to appreciate at just 0.3 percent through next August, and Peoria and Danville are predicted to depreciate at -0.7 percent and -1.2 percent, respectively.

In the South, Texas has healthy markets, notably Midland and Odessa, which show definite strengthening while others, such as Dallas and College Station, show definite slowing since last quarter’s report. Although its Bay Area jewel, the San Francisco-Oakland-Fremont MSA, ranks in the Top 10 with projected 9.6 percent appreciation, parts of California are beginning to show some signs of slowing down. San Jose, for example, is showing a projected appreciation rate dropping from double-digits to 8.3 percent over the next 12 months.  In this third-quarter 2018 VeroFORECAST, the top market, Bremerton-Silverdale, is predicted to appreciate more than a half-percentage higher than the top market in the previous report, Seattle-Tacoma at 11.1 percent. On the other end, the Farmington, NM MSA is predicted to depreciate a half-percentage point more than the second-quarter’s lowest scorer, Cumberland, MD-WV, at -1.6 percent. 

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How Is The Market Really Doing?

Veros Real Estate Solutions (Veros), an award-winning industry leader in enterprise risk management, collateral valuation services, and predictive analytics, has released its second quarter 2018 VeroFORECAST, which predicts that over the next 12 months residential market values will appreciate at a national average of +4.4%, a slightly higher rate than predicted in the previous report.

Each quarter Veros releases a new VeroFORECAST report, developed by projecting the impact of various key predictors on real estate values at four future time horizons: 6, 12, 18 and 24 months. The report released today, which covers the 12 months from June 1, 2018 through June 1, 2019, integrates data from 1,005 counties, 354 metropolitan statistical areas (MSAs), and 13,877 zip codes that cover 82% of the U.S. population.

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“Washington State and Nevada occupy six of the ten highest-appreciating MSAs in the U.S. and the remaining four are in California, Oregon and Idaho,” said Eric Fox, VP of Statistical and Economic Modeling at Veros. “This is the 24th quarter in a row where this index has forecast overall appreciation. Interestingly, the metro markets that are projected to appreciate the most over the next 12 months in this VeroFORECAST release are also among the most populated, while the markets that are expected to depreciate most are all among the least populated. For example, the average population of the top 25 metros is 1.7 million and the average population of the bottom 25 metros is 318,000.”

The new report reconfirms what has been experienced over the last several years: high demand for housing and historically low housing supply remain the key determinants of where any given market is expected to be on the appreciation-depreciation spectrum.

There is also a geographical component to real estate appreciation predictions. Not only are the projected top ten trending U.S. markets, as determined in the current VeroFORECAST, concentrated in the West, but the ten that are predicted to depreciate slightly or remain the same, are in the East and South.

For the 12 months beginning June 1, 2018, Veros predicts all ten of the highest-appreciating MSAs and 21 of the top 25 markets will be in seven contiguous far west states, from Washington and Idaho in the north, down through Oregon and California, and east to Nevada, Utah and Colorado.

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“There are several factors driving up home prices in the Seattle area, including a thriving economy and a lack of buildable land,” said Economist Matthew Gardner, with Seattle-based Windermere Real Estate. “There is also growing demand for housing thanks to the substantial in-migration of technology workers from the Bay Area who are relocating to Seattle because of the robust job market and relatively inexpensive home prices when compared to those in San Francisco,” Gardner concluded.

Despite migration to Seattle from California’s Bay Area and Silicon Valley, the San Jose market is one of the top five markets for appreciation this quarter, ranked fourth at +9.5 percent.

“The San Jose market remains exceedingly strong with a supply of homes at an extremely low 1.0 months, while its population is continuing to grow steadily. Its unemployment is an extremely low 2.6%. The Silicon Valley continues to attract workers for high tech jobs, and there isn’t enough housing to fill demand, making this one of the strongest markets in the country,” Fox said.

Much like San Jose, this quarter’s fourth highest appreciating market Reno-Sparks is experiencing extremely low housing inventories in conjunction with rapidly growing population.

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“For at least eight years now Reno-Sparks has been experiencing incredible growth, with an influx of companies in the technology space from California and other states,” said Craig King, TITLE, Chase International. “Tesla is currently building a 14 million-plus square foot gigafactory here, which, upon completion, is expected to be the biggest building in the world. With so many people moving into the area from higher equity regions, there is a great deal of pressure on the housing market to catch up and builders are still under building. This phenomenon has been going on for at least 5 to 6 years now and we are still 20,000 housing units behind what’s needed,” King concluded.

The supply of homes in Reno is 2.7 months and continues to fall. Combined with an unemployment rate of a low 3.8% and rapid population growth of 15%+, this is one of the forecast’s strongest markets in the country.

Nearly one-half of the bottom 25 markets are in the northeastern states of New Jersey, Connecticut, New York, Maine, Pennsylvania and Maryland, with eight others in the deep south: Louisiana, Alabama, Arkansas and Mississippi.

Among the ten MSAs projected to have the highest depreciation over the next 12 months, only three were in the previous VeroFORECAST bottom ten, and the rate of depreciation is significantly less. In the last report, Atlantic City was predicted to depreciate at nearly 3%, and it now is forecast to depreciate at -1.0%. Cumberland, Maryland-West Virginia MSA, which was not among the bottom ten MSAs in the last report, now has the worst forecast depreciation, albeit only -1.6%.

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Partnership Provides AVM And eValuation Services

Veros, a developer of enterprise risk management, collateral valuation, and predictive analytics services, has partnered with Valligent, an innovator in non-traditional appraisals and appraisal review services, to provide a complete solution in collateral valuation and analytics that will enable lenders to cut costs and increase operational efficiency.

The companies’ services will be integrated through VeroPRECISION, the AVM decisioning product Veros introduced last October. VeroPRECISION uses sophisticated data analysis to first determine a subject property’s suitability for an automated valuation model (AVM). Independent testing shows that, while 70% to 80% of property valuations are best handled by AVMs, the balance require hands-on analysis through an alternative, such as a desktop, drive-by, or traditional appraisal.

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The 20% to 30% of subject properties determined more appropriate for an alternative to an AVM can be automatically forwarded to Valligent, which will provide a desktop valuation performed by one of its own highly trained analysts or appraisers, based on each client’s pre-determined preferences.

In cases where VeroPRECISION instantly deems a property appropriate for AVM valuation, those customers will immediately receive one of the industry’s top performing AVMs chosen specifically for the particular subject property. Based upon machine learning in a production environment, the VeroPRECISION decision engine determines the most accurate valuation at the subject property level. Unlike traditional cascade approaches that employ county level look-up tables, VeroPRECISION makes its AVM determinations at the specific property level.

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Integrating Veros and Valligent technology is expected to be of special interest to home equity lending, where HELOCs have grown as a share of lending business in recent years.

“With rising home prices increasing the amount of available equity, and rising mortgage rates making a new purchase less attractive, homeowners are increasingly choosing to remain in and remodel their homes,” said Robert Walker CMB, CMT Vice President of Sales at Veros. “By partnering with Valligent, we have given VerosPRECISION a seamless, integrated fulfillment process that takes it far ahead of any other AVM service.”

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“This is much more than a one-stop service that covers valuation reports for the full spectrum of home equity lending needs,” added Jeremy McCarty, Valligent CEO and chief valuation strategist. “It’s also a way for lenders to ensure that their valuation processes are fully compliant with all of the related regulations.”

The VeroPRECISION Valuation Decision Engine is available through VeroSELECT, Veros’ vendor-agnostic, single-enterprise management platform, which provides access to a comprehensive suite of innovative collateral risk solutions from 10 vendors designed to help lenders best assess collateral values at origination and across existing portfolios. In addition to VeroPRECISION and the VeroVALUE suite of valuation products, VeroSELECT offers AVM Cascade Management, VeroBPO Broker Price Opinions, VeroPHOTO Plus: Property Condition Reports, and its proprietary, best-in-class valuation forecasting tool, VeroFORECAST.

 

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VeroFORECAST Reveals A Record Breaker

Veros Real Estate Solutions (Veros) reports that residential market values will continue their overall upward trends during the next 12 months, with overall annual forecast appreciation of +4.2%, which is higher than last quarter’s forecast appreciation of +4.0%. And, only 3% of markets are expected to depreciate which is the same as last quarter’s forecast.

This insight comes from the company’s most recent VeroFORECAST, a quarterly national real estate market forecast for the 12-month period ending December 1, 2018.

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“Our Q4 VeroFORECAST is continuing to show the market as very strong for the overall U.S. residential real estate market,” says Eric Fox, VP of Statistical and Economic Modeling at Veros. “Washington State is set to boom– occupying all of the Top 5 market spots. This has never happened before with one state occupying all of the top positions. Seattle is #1 with expected appreciation of over 12% followed by other Washington markets of Bellingham, Bremerton, Kennewick, and Mount Vernon all near 10%. These markets show no signs of letting up as supply of homes is exceedingly low and population continues to grow.”

Fox continues, “Metro areas in Colorado, Idaho, Oregon, and Washington comprise the remaining metro areas in the Top 10. If you want strong appreciation, move to the Northwest portion of the U.S. “

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Conversely, 12 of the bottom 25 markets are in the Northeastern states of Connecticut, New Jersey, Maine, West Virginia, Maryland, Pennsylvania, and New York. Bangor, Maine is forecast to be the worst performing market with 2.0% depreciation with the markets of Bridgeport, Longview, Vineland, and Atlantic City forecast to have approximately 1.0% depreciation over the coming year.

“Unfortunately, the fundamentals of these markets remain static with flat or declining populations and relatively high unemployment rates,” Fox explains. “These factors contribute to a high housing supply with low demand that are unlikely to change anytime soon.”

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“Some interesting trends are also emerging with this forecast. Parts of California are starting to see an uptick in forecast appreciation with top performing markets such as San Diego, San Jose, Los Angeles, and Sacramento expected to have appreciation from 7.5% to 8.0% which is up from 6.5% to 7.5% from the last update.” Fox continues, “Also, many Texas markets are softening with Dallas and Austin losing 1% in forecast appreciation since the last update.”

US Housing Market Outlook Q1 2018: VeroFORECAST Predictions

Helping Lenders Comply With 2018 Regulation

Veros, a provider of data, analytics and technology for the mortgage banking industry, has developed a solution for lenders specializing in PACE (Property Assessed Clean Energy) loans in the state of California, where new compliance requirements went into effect on January 1, 2018.

VeroPACE, available through the VeroSELECT ordering platform, will generate, analyze, rank, and report the multiple Automated Valuation Models (AVMs) now required for PACE lending by California State Assembly Bill 1284 and the companion State Senate Bill 242.

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“The passage of this legislation significantly changed the valuation process for PACE loans, which are used to finance greater energy efficiency in homes,” said Veros VP of Sales Rob Walker. “Historically lenders could process a PACE loan in California using the results of a single AVM, but they now need three AVMs and must use a new method of calculating the final value.”

AB 1284 intends to enhance PACE underwriting by requiring lenders to obtain the three AVMs from a third-party vendor, then choose the one with the highest confidence score and calculate the midpoint of that AVM’s high-low value range. The resulting value, combined in a report with data from the three AVMs, becomes the valuation submitted with the PACE loan application.

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“Ordering three AVMs on the same property can be difficult,” Walker added. “And because different AVM providers have different methods of producing confidence scores and values, the mid-range requirement has presented some significant challenges for many PACE lenders. Also, if lenders cannot get three AVMs, they have to get an appraisal, which will add time and cost to the loan application process. To combat this, lenders need to achieve high AVM hit rates.”

“The good news for PACE lenders who are struggling with this new compliance requirement is that VeroPACE handles the entire process for them,” said Luke Ziegenmeyer, Director of Product Management at Veros. “And, if need be, we have an optional add-on for VeroPACE users that can facilitate the request and delivery of appraisals as well.”

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When VeroPACE is ordered through the VeroSELECT platform, a single data call is made, which generates a “cascade” through which up to 10 AVMs may be run to increase the likelihood of getting a hit. The VeroSELECT system stops requesting AVMs once it has received three valid hits. VeroPACE then determines the AVM with the highest confidence score, calculates the average of its high and low values, and returns it to the lender in a standardized data format. VeroPACE also generates a coversheet with all the data elements that can be put in a file of supplemental information.

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The Best And Worst Real Estate Markets Are …

Veros Real Estate Solutions (Veros), a provider of enterprise risk management, collateral valuation services and predictive analytics, reports that residential market values will continue their overall upward trends during the next 12 months, with overall annual forecast appreciation of +4.2% which is higher than last quarter’s forecast appreciation of +4.0%. And, only 3% of markets are expected to depreciate, which is the same as last quarter’s forecast.

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This insight comes from the company’s most recent VeroFORECAST, a quarterly national real estate market forecast for the 12-month period ending December 1, 2018.

“Our Q4 VeroFORECAST is continuing to show the market as very strong for the overall U.S. residential real estate market,” says Eric Fox, VP of Statistical and Economic Modeling at Veros. “Washington State is set to boom– occupying all of the Top 5 market spots. This has never happened before with one state occupying all of the top positions. Seattle is #1 with expected appreciation of over 12% followed by other Washington markets of Bellingham, Bremerton, Kennewick, and Mount Vernon all near 10%. These markets show no signs of letting up as supply of homes is exceedingly low and population continues to grow.”

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Fox continues, “Metro areas in Colorado, Idaho, Oregon, and Washington comprise the remaining metro areas in the Top 10. If you want strong appreciation, move to the Northwest portion of the U.S. “

Conversely, 12 of the bottom 25 markets are in the Northeastern states of Connecticut, New Jersey, Maine, West Virginia, Maryland, Pennsylvania, and New York. Bangor, Maine is forecast to be the worst performing market with 2.0% depreciation with the markets of Bridgeport, Longview, Vineland, and Atlantic City forecast to have approximately 1.0% depreciation over the coming year.

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“Unfortunately, the fundamentals of these markets remain static with flat or declining populations and relatively high unemployment rates,” Fox explains. “These factors contribute to a high housing supply with low demand that are unlikely to change anytime soon.”

“Some interesting trends are also emerging with this forecast. Parts of California are starting to see an uptick in forecast appreciation with top performing markets such as San Diego, San Jose, Los Angeles, and Sacramento expected to have appreciation from 7.5% to 8.0% which is up from 6.5% to 7.5% from the last update.” Fox continues, “Also, many Texas markets are softening with Dallas and Austin losing 1% in forecast appreciation since the last update.”

Veros Projects More Home Appreciation In 2017

Veros projects that residential market values will continue their overall upward trend during the next 12 months, with overall annual forecast appreciation of +3.7% (up slightly from last quarter’s +3.5%). The insight comes from the company’s most recent VeroFORECAST, a quarterly national real estate market forecast for the 12-month period ending December 1, 2017.

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“Although we expect to see interest rates increasing and inflation ramping up, the overall labor market is expected to remain strong. These effects will essentially offset each other, and allow the overall national forecast to remain strong, and consistent with what has been predicted and observed in previous forecast updates,” says Eric Fox, VP of Statistical and Economic Modeling at Veros.

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Interestingly, Washington, Oregon, and Colorado monopolized the top positions in all of 2016, and continue to hold 9 of the top 10 markets in the forecast for the next 12 months. Seattle and Denver lead the way in the #1 and #2 spots with forecast appreciation of 10.9% and 10.2%, respectively. Bend, OR, Portland, OR, and Bremerton, WA round out the top five markets, and the northwest states of Washington, Oregon, Idaho, and Colorado represent 17 of the top 25 forecast markets demonstrating continued record-setting geographic concentration.

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On trend with last quarter’s forecast, the weakest five performing markets are expected to depreciate between 1% to 2.5%. “Thus, even these worst performing markets won’t see a significant drop,” says Fox. The worst performing market this quarter is expected to be Poughkeepsie, NY (- 2.5%). Binghampton, NY (-1.9%), Atlantic City (-1.8%), Cumberland, MD (-1.7%), and Vineland, NJ (-1.3%) rounds out the weakest five. Record geographic concentration also persists on the weaker end of the forecast spectrum with 6 of the 10 weakest markets residing in New Jersey, the Hudson Valley region of New York, and Connecticut.

In comparison to last quarter, VeroFORECAST predicts continued softening in the once-hot markets of South Florida and the Bay Area. Markets such as San Francisco and San Jose are down again by 1% to forecasts in the 5% range. Likewise, South Florida markets such as Miami and Fort Myers are down another 1% to forecast at the 4% range.

VeroFORECAST_Strongest_Weakest_Markets-Dec2015_Dec2016