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Veros Expects Lengthy Recovery but Less Rapid Decline in Home Prices

Markets in North Dakota and Hawaii show the strongest potential for home price appreciation over the next year, according to ""Veros Real Estate Solutions"":http://www.veros.com.


At the other end of the spectrum, the risk management and valuation company sees continued weakness in some of the hardest hit markets of California, Nevada, and Florida, although price depreciation is expected to slow dramatically from the free-fall days of earlier in the downturn.

Veros has released its market forecast for the 12-month period ending September 1, 2012. Nationally, Veros' own home price index continues to show stability in its quarterly results, holding fairly constant at -1.7 percent.

The company says recent performance in home prices indicates slight depreciation over the next 12 months. With no significant drags on the national index and few markets showing strong appreciation, a very slow recovery for housing prices is anticipated, according to Veros.

*Projected Five Strongest Markets*

1. Bismarck, ND +5.6%
2. Honolulu, HI +2.9%
3. Fargo, ND-MN +2.0%
4. Harrisburg/Carlisle, PA +1.9%
5. Pittsburgh, PA +1.9%

Unemployment and housing supply continue to be key discriminators between the strongest and weakest housing markets, according to Veros.

The company explained that areas of North Dakota are showing strength due to a notably low unemployment rate


at 3.5 percent and a growing economy and population fueled by an oil boom and strong demand for agriculture.

Honolulu attributes its strength to an unemployment rate of 5.7 percent, its lowest housing supply in the past five years, and a high rate of affordability.

According to Veros, Pittsburgh, Washington D.C., and Boston remain the strongest big city markets, with visible strength also returning to the Denver housing market.

Additionally, regions in Alaska and Hawaii continue to maintain a strong housing market due to affordability, lower interest rates and unemployment, as well as an increasing population.

*Projected Five Weakest Markets*

1. Bakersfield, CA -5.5%
2. Reno/Sparks, NV -5.1%
3. Deltona/Daytona Beach/Ormond Beach, FL -5.1%
4. Las Vegas/Paradise, NV -5.0%
5. Fresno, CA -4.8%

By Veros' assessment, the nation's weakest housing markets can be found in Nevada and the inland areas of California. Beyond the five bottom-rung markets listed above, the company also sees weakness in Washington and Oregon housing markets.

While some markets in Arizona and Florida are still pointedly weak, Veros has seen notable improvements in such areas as Miami, Tampa, and Fort Myers, Florida.

According to Eric Fox, VP of statistical and economic modeling for Veros, some of the hardest hit markets during the downturn are continuing to show some surprising strengths, although they are not out of negative territory.

For example, Miami is forecast to see a slight one to two percent depreciation versus the 10 percent depreciation of the recent past.

""Overall, the recovery in the housing market is limited to just a few markets and is taking a long time to occur, Fox said. ""The encouraging news is that many markets are no longer expected to be rapidly declining.""

Veros' 12-month forecast indicates that there will not be a return to double-digit declines in home prices. The company anticipates a maximum of five percent appreciation for growing housing markets and five to six percent decline for weaker markets.