Veros Real Estate Solutions, a provider of enterprise risk management solutions, collateral valuation services and predictive analytics, has released the results of its Veros’ future home price index (HPI), which is a quarterly report that predicts home prices into the future.
Veros’ first quarter HPI predicts that there will be, on average, 3.4 percent appreciation over the next 12 months for the top 100 metro areas, down from last quarter’s 5.1 percent forecast, which may very well have been the peak for the national outlook.
The first quarter report is the seventh consecutive quarter where the index has forecast future appreciation.
This insight is from the company’s VeroFORECAST national real estate market forecast for the 12-month period ending March 31, 2015. VeroFORECAST is updated quarterly and covers more than 1,000 counties, 345 metro areas and 13,770 ZIP codes.
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,” Fox said. “The market is stabilizing and the overall outlook is very positive. 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.
“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,” Fox said. “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. The average national forecast for the next 12 months is 3.4 percent, and the average forecast for the following 12 months (months 13 to 24) is only 2.0 percent.”
The projected five strongest markets over the next 12 months include:
- San Jose-Sunnyvale-Santa Clara, Calif., (+9.7 percent);
- Los Angeles-Long Beach-Santa Ana, Calif., (+9.3 percent);
- Midland, Texas (+9.3 percent);
- Bismark, N.D., (+9.1 percent); and
- San Francisco-Oakland-Fremont, Calif., (+8.8 percent).
The projected five weakest markets over the next 12 months include:
- Atlantic City, N.J., (-2.5 percent);
- Norwich-New London, Conn., (-1.7 percent);
- Fayetteville, N.C., (-1.6 percent);
- Rockford, Ill., (-1.6 percent); and
- Winston-Salem, N.C., (-1.6 percent).