Veros: Home Price Appreciation Will Be Mostly Flat For Next Two Years

Although home prices are forecast to rise another 3.4% over the next 12 months, home price appreciation is expected to remain relatively flat over the next two years, according to Veros Real Estate Solutions' VeroFORECAST report.

‘The wave of appreciation may have crested, but it has been an impressive recovery in many respects,’ says Eric Fox, vice president of statistical and economic modeling for Veros and developer of the VeroFORECAST. ‘The market is stabilizing and the overall outlook is very positive. 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.’

Home prices were forecast to rise about 5.1% in the first quarter, according Veros. It was the seventh consecutive quarter where the index has shown forecast appreciation.

While the market is expected to be healthy overall, the level of home price appreciation is definitely slowing, the report finds.

‘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,’ Fox adds. ‘Importantly, we don't foresee drastic slowing – simply some moderation.’

Fox says that rising interest rates and lower affordability are the primary reasons why home price appreciation is forecast to slow 13 to 24 months from now.

‘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 percent,’ Fox says.

The five markets projected to see the strongest gains in home price appreciation over the next two years include San Jose-Sunnyvale-Santa Clara, Calif. (+9.7%), Los Angeles-Long Beach-Santa Ana, Calif. (+9.3%), Midland, Texas (+9.3%), Bismark, N.D. (+9.1%) and San Francisco-Oakland-Fremont, Calif. (+8.8%).

The five markets projected to see the weakest gains in home price appreciation over the next two years include Atlantic City, N.J. (-2.5%), Norwich-New London (-1.7%), Fayetteville, N.C. (-1.6%), Rockford, Ill. (-1.6%) and Winston-Salem, N.C. (-1.6%).


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