Property Appreciation to hit the brakes nationally, according to Veros’ 12-month forecast update for second quarter 2014
VeroFORECAST predicts substantial slowing after seven consecutive quarters of impressive appreciation
SANTA ANA, CA (May 1, 2014) — Veros Real Estate Solutions (Veros), an industry leader in enterprise risk management, collateral valuation services and predictive analytics, says that the residential real estate market has crested after almost two straight years of rapidly increasing appreciation. This insight is from the company’s VeroFORECAST national real estate market forecast for the 12-month period ending March 31, 2015, updated quarterly and covering more than 1,000 counties, 345 metro areas, and 13,770 zip codes.
Veros’ future home price index (HPI) forecast indicates that, on average for the top 100 metro areas, Veros expects 3.4 percent appreciation over the next 12 months, down from last quarter’s 5.1 percent forecast, which may very well have been the peak for the national outlook. This is the seventh consecutive quarter where the index has shown forecast appreciation. 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,” says Fox. “The market is stabilizing and the overall outlook is very positive,” he notes. “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, Fox adds. “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. 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,” he explains. “The average national forecast for the next 12 months is 3.4 percent, and the average forecast for the following 12 months (months 13-24) is only 2.0 percent,” Fox says.
Projected Five Strongest Markets*
1. San Jose-Sunnyvale-Santa Clara, CA +9.7%
2. Los Angeles-Long Beach-Santa Ana, CA +9.3%
3. Midland, TX +9.3%
4. Bismark, ND +9.1%
5. San Francisco-Oakland-Fremont, CA +8.8%
Projected Five Weakest Markets*
1. Atlantic City, NJ -2.5%
2. Norwich-New London, CT -1.7%
3. Fayetteville, NC -1.6%
4. Rockford, IL -1.6%
5. Winston-Salem, NC -1.6%
*Markets demonstrated are for residential real estate in major metro areas (typically greater than 250,000 residents) among single-family homes in the median price tier.
About Veros Real Estate Solutions
Veros Real Estate Solutions, a proven leader in enterprise risk management and collateral valuation services, uniquely combines the power of predictive technology, data analytics and industry expertise to deliver advanced automated decisioning solutions. Veros products and services are optimizing millions of profitable decisions throughout the mortgage industry, from loan origination through servicing and securitization. Veros provides solutions to control risk and increase profits including automated valuations, fraud and risk detection, portfolio analysis, forecasting, and next-generation collateral risk management platforms. Veros is headquartered in Santa Ana, Calif. For more information, please visit www.veros.com or call (866) 458-3767.
About Eric Fox, VP of Statistical and Economic Modeling
Eric Fox received his M.S. in Statistics and B.S. in Mathematics and Economics from Purdue University, and has more than 22 years of industrial experience in statistical and econometric modeling, probabilistic life methodology development, statistical training, probabilistic design software development, and probabilistic financial/competitive analysis. Fox has published more than 20 technical papers on probabilistic and statistical methods.
Additional forecasts for other U.S. markets available to the press upon request.
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