According to the latest VeroFORECAST report from Veros Real Estate Solutions, the average projected appreciation rate for residential real estate will be more than 3.7 percent in the next 12 months.
This maintains the rate predicted in the first quarter 2019 forecast and signifies a leveling out after a four-quarter decline from a projected appreciation rate of more than 4.5 percent a year ago, Veros reported.
“This flattening indicates that although there is definite softness overall in the housing market, the fundamentals are healthy,” Veros Statistical/Economic Modeling Vice President Eric Fox said in the report.
“One potential contributing factor we saw in the models is some softening of mortgage interest rates, which is helping to prop up values and stem the decline,” added Fox, who authored the report.
Another characteristic holding steady is that 5 percent of markets are projected to depreciate over the upcoming year, a figure that has remained the same since fourth quarter 2018, after it jumped from 3 percent in a single quarter.
“Housing supply is a key discriminator between the markets in this forecast’s top and bottom rankings,” the report states. “A very low housing supply is a feature of the markets where prices are expected to increase significantly. Population trends are another consistent characteristic, with slow or declining population growth contributing to low demand in markets at the lowest ranks of the forecast.”
The markets projected to appreciate the most through June 1, 2020, are Odessa, Texas (+9.7 percent);Coeur D’Alene, Idaho (+9.5 percent); Idaho Falls, Idaho (+9.4 percent); Boise City-Nampa, Idaho (+9.1 percent) and Midland, Texas (+8.0 percent).
The markets expected to appreciate the least are Grand Forks, N.D.-Minn. (-1.9 percent); Bridgeport-Stamford-Norwalk, Conn. (-1.7 percent); Baton Rouge, La. (-1.6 percent); Lafayette, La. (-1.2 percent); and Norwich-New London, Conn. (-1.0 percent).
The Midwest states of Indiana, Michigan, and Ohio are another area showing strength, with average statewide appreciation for all three expected to be around +5.0 percent.
Despite having two of the forecast’s top-ranked MSAs, Texas is predicted to experience continuing softening. The major markets of Dallas-Fort Worth-Arlington and Houston-Sugar Land-Baytown are forecast to see residential real estate appreciate between just +2.0 and +3.0 percent.
Prices for property in California are expected to remain relatively soft. All major markets in the Golden State, including Los Angeles, the Bay Area, and San Diego, are expected to appreciate between +2.5 and +4.5 percent, in stark contrast to predicted appreciation rates of the recent past, which were often in double digits.