San Diego should see home prices rise 3.5% next year, but prices in Florida and Nevada, two states where the foreclosure crisis is especially acute, will drop 6% to 7%, according to a real estate market forecast. While 40% of major metros are expected to see appreciation in home prices, most of that is expected to be fairly mild. The forecast comes from Santa Ana, Calif.-based Veros Real Estate Solutions, a technology firm serving the financial services industry. The forecast looks at the median price tier in metros of 500,000 or more. For December 2010 through December 2011, select markets in the U.S. can expect to witness 2.5% to 3.5% appreciation on home values, including Washington state’s tri-city area. Projected five strongest markets: 1.    San Diego / Carlsbad / San Marcos, Calif. (+3.5%) 2.     Kennewick / Richland / Pasco, Wash. (+3.4%) 3.    Pittsburgh, Pa. (+2.7%) 4.     Fargo, N.D. (+2.6%) 5.    Washington, D.C. metro area (+2.5%) Projected five weakest markets: 1.     Reno/Sparks, Nev. (-7.2%) 2.     Orlando/Kissimmee, Fla. (-6.5%) 3.     Boise City/Nampa, Idaho (-6.4%) 4.     Deltona/Daytona Beach/Ormond Beach, Fla. (-6.3%) 5.     Port St. Lucie/Fort Pierce, Fla. (-6.3%) Strengthening markets The Central Plains and Texas continue to see positive appreciation compared to prior periods, with generally good forecasts in Texas, Louisiana, Arkansas, Oklahoma, South Dakota, North Dakota and Iowa, Veros said.  A strengthening trend is also spreading to the Midwest with encouraging numbers in parts of Mississippi, Kentucky, Illinois, Indiana and Wisconsin. “Smaller metro markets with populations less than 250,000 make up the majority of the better appreciating markets,” says Eric Fox, Veros’ vice president of statistical and economic modeling, crediting affordability factors. Weak markets The outlook for Florida remains weak, with six of the 10 U.S. markets expecting the greatest depreciation located there.  Other especially weak forecasts include Reno, Nev., California’s interior, much of Idaho, and western portions of Washington and Oregon. “It is noteworthy that depreciating forecasts remain much better than those from a year ago with nothing worse than 7% depreciation,” Fox observes.  “A year ago, we were seeing some markets with depreciation rates in the double-digit range.” Looking out to the 12 to 24 month horizon, nearly 60% of markets are expected to appreciate,” he says, “So while things aren’t happening rapidly, the forecast indicates they are getting better.” Veros provides forecasts on the national real estate market with the capacity to segment results by property types, pricing tiers, and by metro area, county or ZIP code.  The forecast utilizes more than 50 critical decisioning factors to develop reliable market trend predictions, the company said. It takes into account factors such as unemployment and housing inventory levels, among others. Write to Kerry Curry.

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