Home price appreciation will continue to slow in most markets through 2019, with more markets entering into negative territory, according to the latest VeroFORECAST from Veros Real Estate Solutions.
The quarterly report forecasts that home prices will rise an average of 3.9% in the top 100 most populous markets over the next 12 months – down from the 4.5% predicted in the third quarter report.
“This amount of change from one quarter to the next is significant,” says Eric Fox, vice president of statistical and economic modeling at Veros, in the report. “While the market fundamentals remain solid and we still expect the overall housing market to remain healthy, there is a definite slowing down of most markets from last quarter’s update.”
Fox cautions that the firm’s data does not point toward a crash in the housing market; rather, “a slowing down as the strength of the past few years is expected to dissipate somewhat in most markets.”
With the economy strong and unemployment continuing to drop, the report points to housing supply and interest rates as the key contributors to the softening.
“Overall, interest rates appear to be softening the forecasts in many markets by one-to-two percent over what they would have been had the flat interest rate environment continued as it has for the past several years,” Fox says. “At the same time, housing supply is a key discriminator between our top and bottom forecast performing markets.”
Markets forecast to see the highest home price appreciation in 2019 include Boise City/Nampa, Idaho (9.5%); Olympia, Wash. (8.8%); Midland, Texas (8.7%); Idaho Falls, Idaho (8.6%); and Odessa, Texas (8.4%).
Markets forecast to see the least (i.e. negative) appreciation include Farmington, Minn. (-2.6%); Danville, Ill. (-1.4%); Decatur, Ill. (-1.0%); Peoria, Ill. (-1.0%); and Grand Forks, N.D. (-.08%).
Many of the top markets for home price appreciation in the U.S. have already seen a significant softening, Fox says.
“California is softening overall,” he says. “In Southern California, particularly, we expect Los Angeles, Ventura, Orange, Riverside and San Diego Counties to appreciate less than five percent over the next year.”
Other areas appreciating at lower rates include Denver, Las Vegas, Reno and Dallas, with Manhattan and its surrounding New York market forecast to appreciate at just one percent for the next 12 months.
There are also lower predictions for Utah, including Salt Lake City.
Eighteen of the 100 markets tracked in the report are forecast to see depreciation, on average, which is twice as many when compared with the third-quarter report.