Veros Predicts Housing Market To Slow Significantly

Veros Real Estate Solutions, a provider of enterprise risk management and collateral valuation services, released its 2022 Q3 VeroFORECAST that anticipates home prices will appreciate on average just 1.5% for the next twelve months. This is a significant drop from the 4.5% 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.

The steep decrease in expected average appreciation of only +1.5% over the next 12 months is not a “one size fits all” for every market but rather a combination of dozens of markets expected to depreciate, many markets that that are forecast to be relatively flat, and a few markets that are still expected to appreciate reasonably well.  But clearly, the most notable finding in this update is the increase in expected depreciating markets as compared to the update one quarter ago.

Eric Fox, Chief Economist at Veros commented that, “The number of markets expected to have annual depreciation has grown from just a few during our previous quarterly update to now a few dozen during this update.  Though most depreciation is expected to be mild at this point, the increase in number of markets where it is forecast to be present is a noteworthy change.  Some markets such as Atlantic City are still forecast to depreciate the most at around 4%.  However, there are former hot-running cities such as Las Vegas and Boise which are now appearing near the bottom of the pack with low single-digit depreciation expected.  Interest rates increases and the fear of recession are driving some buyers to the sidelines which is causing some of these trends.”

However, all markets cannot be characterized by negative outlooks.  Markets in the middle of the country such as Lincoln and Omaha, Nebraska, and Wichita Kansas are looking strong with 6% to 7% appreciation expected over the next year.  Newcomers Richmond, Virginia, and Indianapolis are also expected to be solid performing markets with annual appreciation expected in the 6% range.  Likewise, North Carolina continues to be strong with its expected performance.  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 5% to 7% level which is somewhat lower than last quarter’s update and significantly than what the top performing markets were expected to do just six months ago. 

The 10 Strongest-Performing Markets Over Next 12 Months

Rank	Market	Forecast
1	LINCOLN, NE	7.2%
2	RICHMOND, VA	6.9%
3	OMAHA, NE	6.4%
4	INDIANAPOLIS, IN	6.4%
5	WICHITA, KS	6.4%
6	FAYETTEVILLE, NC	6.3%
7	WARNER ROBINS, GA	5.9%
8	WILMINGTON, NC	5.8%
9	GOLDSBORO, NC	5.8%
10	GRAND RAPIDS, MI	5.7%

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	ATLANTIC CITY, NJ	-3.7%
2	LAKE CHARLES, LA	-2.4%
3	CHICAGO, IL	-2.0%
4	LAS VEGAS, NV	-1.9%
5	COEUR D’ALENE, ID	-1.8%
6	PRESCOTT VALLEY, AZ	-1.6%
7	ST. GEORGE, UT	-1.3%
8	EVANSVILLE, IN-KY	-1.3%
9	BOISE CITY, ID	-1.2%
10	ODESSA, TX	-1.1%