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Home | Daily Dose | Home Prices Expected to Fall in Some Markets
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Home Prices Expected to Fall in Some Markets

home-price-decline

With ongoing home price gains continuing to trend downward, one in five markets are poised for depreciation over the next year, according to one analytics firm.

Over the 12-month period ending in June 2015, nearly 20 percent of the more than 340 markets covered in Veros Real Estate Solutions' quarterly VeroFORECAST are expected to experience a decline in home prices, the company said Tuesday.

While that leaves 80 percent of the country on an upward growth path, "all but the most upbeat markets are slowing in their value improvements," Veros said in its third-quarter update.

California leads among the projected strongest markets, with the San Jose-Sunnyvale-Santa Clara and San Francisco-Oakland-Fremont metros ranking first and second with predicted value growth of 10.6 percent and 10.5 percent, respectively.

"San Jose housing supplies are down and San Francisco is seeing a serious housing shortage," said Eric Fox, Veros' VP of statistical and economic modeling and the developer of VeroFORECAST. "Inventories in both are down 70 percent from their peak in 2008 and demand is outstripping supply, leading to price run-ups and decreased affordability despite low interest rates."

Out of the few available homes in the most affordable price tier, "those that remain are hotly contested," Fox continued.

Also ranking in the top five markets for predicted growth are Austin-Round Rock, Texas (10.0 percent); San Diego-Carlsbad-San Marcos, California (9.0 percent); and Houston-Sugar Land-Baytown, Texas (8.9 percent).

The projected five weakest markets are a bit less concentrated, though most share the same region. Taking the top spot for projected depreciation is Rockford, Illinois, where home prices are forecast to decline 3.4 percent by next June.

"Rockford real estate is experiencing hard times, going from -2.6 percent to -3.4 percent in a single quarter," Fox said. "The culprit is its 10.4 percent unemployment rate coupled with a flat population growth trend. These are familiar and persistent themes among the weakest markets."

Atlantic City, New Jersey, which was previously the No. 1 market for expected depreciation, fell back to the fifth spot, with -2.2 percent growth expected.

Falling in between the first and fifth slots were Trenton-Ewing, New Jersey (-2.9 percent); Scranton-Wilkes-Barre, Pennsylvania (-2.6 percent); and Poughkeepsie-Newburgh-Middletown, New York (-2.5 percent).

Nationally, Veros' future home price index forecast suggests the top 100 metros will experience 2.5 percent appreciation over the next year, down from last quarter's predicted 3.4 percent growth.

"In summary, we are still seeing good appreciation in the top markets, but there is definite slowing overall," Fox said.

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About Author: Tory Barringer

Tory Barringer
Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.

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