Valuations provider Veros predicts seven of the 10 top-appreciating markets in the next 12 months will be in Washington and Nevada.
The company’s latest VeroFORECAST, which covers the 12-month period ending Sept. 1, 2018, predicts that on average, the top 100 most populated metro areas will see 4.5% appreciation in the next year.
"This is the 25th quarter in a row where this index has forecast overall appreciation,” said Eric Fox, VP of statistical and economic modeling at Veros. Fox often writes exclusive commentary on the nation's home markets, exclusively for HousingWire.
“We are forecasting that the overwhelming number of metros across the nation, approximately 97%, will appreciate, with just 3% depreciating during this period," he adds. "The fact that these averages are identical to those of last quarter's update indicates that we are seeing consistency in nearly every metro market."
Western states continue to hold all top 10 spots, with forecast appreciation rates running roughly between 9% and 12%, according to Veros.
Seven of those MSAs with the highest-projected appreciation are in Washington and Nevada, with the other three in Idaho, California and Colorado. Another Western state, Utah, is also projected to be a solid performer.
Veros said these five states, along with Oregon, have provided the index's highest-ranked markets throughout 2018.
It is an indication of the changing economy of Idaho that, after being represented in the year's first two quarterly reports by Pocatello, Idaho, with a population of approximately 83,000, we now see the Boise City-Nampa MSA, with more than a third of the state's population, moving in at 11.2%, VeroFORECAST's second-highest projected appreciation figure.
"This is a very strong showing, with the average appreciation of the Top 10 markets forecast to be a half-percentage point higher than in our last report," Fox said. He added that, from an overall perspective, the latest report signals "more of the same" for property values in these markets.
Furthermore, for many of the markets for which data was analyzed, interest rates appear to be softening this quarter's forecasts by 1-2 % over what they would have been had the flat interest rate environment of the past several years continued.
Despite the Western MSAs' domination of projected U.S. real estate appreciation, there are bright spots in every region, according to Veros.
In the South, North Carolina is projected to perform well, as are the Midwest states of Michigan and Indiana, especially the Indianapolis-Carmel, Indiana MSA, where property values are projected to appreciate at 8.5%.
Indiana's nextdoor neighbor, Illinois, however, is forecast to do very poorly, with three of its MSAs in VeroFORECAST's Bottom 10: Bloomington-Normal is forecast to appreciate at just 0.3% through next August, and Peoria and Danville are predicted to depreciate at -0.7% and -1.2%, respectively.
In the South, Texas has healthy markets, notably Midland and Odessa, which show definite strengthening while others, such as Dallas and College Station, show definite slowing since last quarter’s report.
Although its Bay Area jewel, the San Francisco-Oakland-Fremont MSA, ranks in the Top 10 with projected 9.6% appreciation, parts of California are beginning to show some signs of slowing down. San Jose, for example, is showing a projected appreciation rate dropping from double-digits to 8.3% over the next 12 months.
In this third-quarter 2018 VeroFORECAST, the top market, Bremerton-Silverdale, is predicted to appreciate more than a half-percentage higher than the top market in the previous report, Seattle-Tacoma at 11.%.
On the other end, the Farmington, New Mexico, MSA is predicted to depreciate a half-percentage point more than the second-quarter's lowest scorer, Cumberland, MD-WV, at -1.6%.
Here are the new report's Top 10 and Bottom 10 projected markets through August 2019:
TOP 10
- Bremerton-Silverdale, WA…………………………………………… 11.7%
- Boise City-Nampa, ID…………………………………………………… 11.2%
- Las Vegas-Paradise, NV………………………………………………… 10.8%
- Bellingham, WA…………………………………………………………… 10.6%
- Olympia, WA……………………………………………………………….. 10.3%
- Carson City, NV……………………………………………………………. 10.1%
- Reno-Sparks, NV………………………………………………………….. 10.0%
- San Francisco-Oakland-Fremont, CA………………………………. 9.6%
- Denver-Aurora-Broomfield, CO………………………………………. 9.5%
- Seattle-Tacoma-Bellevue, WA………………………………………… 9.3%
BOTTOM 10
- Farmington, NM……………………………………………………………. -2.2%
- Vineland-Millville-Bridgeton, NJ……………………………………. -1.6%
- Danville, IL…………………………………………………………………… -1.2%
- Peoria, IL……………………………………………………………………… -0.7%
- Ocean City, NJ ………………………………………………………………. -0.4%
- Texarkana, TX-Texarkana, AR……………………………………….. -0.2%
- Torrington, CT……………………………………………………………… -0.2%
- Shreveport-Bossier City, LA……………………………………………. 0.2%
- Bridgeport-Stamford-Norwalk, CT…………………………………. 0.2%
- Bloomington-Normal, IL ……………………………………………….. 0.3%
"Housing supply is a key discriminator between the forecasted top- and bottom-performing markets," Fox said. "Where the housing supply is very low, as in our top markets, prices are expected to increase significantly. By contrast, for many of the bottom markets, which are in very slow growth metros, housing supply is projected to remain high."
