Veros' newly expanded VeroFORECAST report reveals an interesting trend: As of the third quarter, the 25 top appreciating markets were west of the Mississippi River, while 24 of the 25 weakest markets were east of the river.
‘The Mississippi River now has the distinction of being the unofficial dividing line of the top 25 and the majority of the bottom 25 markets in the country,’ says Eric Fox, vice president of statistical and economic modeling for Veros and developer of VeroFORECAST, in a release. ‘All of the top 25 markets are west of the Mississippi and, with the exception of Hot Springs, Ark., the entire bottom 25 group is found east of the river.
‘Of course, that does not mean that all of the markets in the west are appreciating, nor does it mean all those in the east are experiencing depreciation,’ he adds.
Nationwide, home prices increased about 2.5% in the third quarter. It was the ninth consecutive quarter in which home prices rose; however, the rate of appreciation has slowed considerably.
Of the 13,904 ZIP codes covered by the report, Veros forecasts that 83% will see home prices rise over the next 12 months.
Markets that are forecast to see the strongest growth in home price appreciation over the next 12 months include Victoria, Texas (9.8%); Houston-Sugar Land-Baytown, Texas (9.7%); San Jose-Sunnyvale-Santa Clara, Calif. (9.6%); Austin-Round Rock, Texas (9.5%); and San Francisco-Oakland-Fremont, Calif. (9.4%).
Markets that are forecast to see the weakest growth in home price appreciation over the next 12 months include Atlantic City, N.J. (-3.3%); Sheboygan, Wis. (-2.7%); Lima, Ohio (-2.4%); Jacksonville, N.C. (-2.3%); and Fond Du Lac, Wis. (-2.3%).
Fox says that when it comes to home prices, it's all about inventory.
‘Not unexpectedly, prices will rise where supplies are low,’ he says. ‘In the bottom forecast markets, declining population trends are a key variable for the sixth straight quarter. Populations follow jobs, and housing supplies are often slow to keep pace with demand supported by increased employment for a variety of reasons.’