Veros National Housing Market Annual Forecast Goes Negative For The First Time In More Than A Decade

Veros Real Estate Solutions, a provider of enterprise risk management and collateral valuation services, released its 2022 Q4 VeroFORECAST that anticipates home prices will turn negative overall and depreciate on average by -0.5% for the next twelve months. This is a significant drop from the 1.5% annual appreciation forecast just one quarter ago.  

VeroFORECAST evaluates home prices in over 300 of the nation’s largest housing markets. Veros is committed to the data science of predicting home value based on rigorous analysis of the fundamentals and interrelationships of numerous economic, housing and geographic variables pertaining to home value.

Eric Fox, Chief Economist at Veros, commented that, “This decrease to an average depreciation of -0.5% over the next 12 months is the first time in over a decade that Veros’ average house price forecast has gone negative.  The last time that the annual forecast was expected to be negative was in 2012 following the aftermath of the previous housing market crash.  Though average depreciation is expected now, the fundamentals of the U.S. housing market in 2023 are much better than they were a decade ago.  This is not going to be a repeat of what we saw in 2007-2008.” 

Extreme depreciation is not expected at this time, though the softening market is a stark contrast to what has been experienced in the previous couple of years.  

The number of markets expected to have annual depreciation has grown from a few dozen during last quarter’s update to nearly half of the markets in this update.  Though the number of depreciating markets may seem large, many of them are forecast to have only mild depreciation of just a percent or two. 

Fox continues by stating, “Interestingly, many markets which were the big housing market winners of the past year or two are now forecast to be some of the worst-performers including San Francisco, Seattle, Austin, Boise, San Jose, and Las Vegas.  These markets are all expecting depreciation over the next 12 months which will range from -5% to -7%”

However, many markets and many parts of the country are forecast to do reasonably well with low, single-digit rates of appreciation.  The state of North Carolina has five markets in the Top 10, and two middle-of-the-country markets of Wichita and Lincoln are again in the Top 5.  Interestingly, the Fort Myers area of Florida, which was hit hard by Hurricane Ian, rocketed into the Top 5 markets in the country due to large demand and limited supply.  All of these markets are characterized by lower median prices, meaning rising interest rates have a lesser impact. 

The 10 strongest performing markets in the country forecast over the next 12 months are only forecast to appreciate at the 4% to 6% level which is down significantly from what the top performing markets were expected to do just a year or two ago. 

The 10 Strongest-Performing Markets Over Next 12 Months

Rank	Market	Forecast
1	FAYETTEVILLE, NC	6.1%
2	WICHITA, KS	5.4%
3	LINCOLN, NE	5.2%
4	CAPE CORAL-FORT MYERS, FL	4.5%
5	BUFFALO-CHEEKTOWAGA, NY	4.3%
6	CORVALLIS, OR	4.1%
7	GREENVILLE, NC	4.1%
8	GREENSBORO-HIGH POINT, NC	3.9%
9	GOLDSBORO, NC	3.8%
10	BURLINGTON, NC	3.8%

The 10 least performing markets over the next 12 months had the most notable changes.  In last quarter’s forecast, there were 5 markets forecast to depreciate.  However, now all of these 10 markets are forecast to depreciate in the next year.    

The 10 Least-Performing Markets Over Next 12 Months

Rank	Market	Forecast
1	ST. GEORGE, UT	-6.5%
2	PROVO-OREM, UT	-6.2%
3	SAN FRANCISCO-OAKLAND-BERKELEY, CA	-6.0%
4	SEATTLE-TACOMA-BELLEVUE, WA	-6.0%
5	AUSTIN-ROUND ROCK-GEORGETOWN, TX	-5.9%
6	BOISE CITY, ID	-5.8%
7	SAN JOSE-SUNNYVALE-SANTA CLARA, CA	-5.1%
8	LAS VEGAS-HENDERSON-PARADISE, NV	-5.0%
9	COEUR D’ALENE, ID	-5.0%
10	KEY WEST, FL	-4.8%