VeroFORECASTSM projects average annual home price appreciation will be up 5% by Q3 2021
SANTA ANA, Calif., October 8, 2020—Today Veros Real Estate Solutions, an industry leader in enterprise risk management and collateral valuation services, released its Q3 2020 VeroFORECASTSM data that anticipates home price appreciation will increase sharply during the next 12 months in the 100 most-populated markets. Prices are predicted to rise 5% by Q3 2021 compared to last quarter when the average increase was only 3.5% into 2021. In March, when the global Coronavirus gripped the U.S., the VeroFORECAST made a bold prediction that the global pandemic would only have a brief impact on housing prices. The market paused for only a quarter then resumed appreciating in the subsequent quarters, being heavily driven by the ultra-low interest rates and population migration trends.
“During the next 12 months, no major metro area is forecast to show notable home price depreciation,” said Darius Bozorgi, CEO of Veros Real Estate Solutions. “Earlier this year when many real estate economists were bracing for home price deprecation triggered by job losses, Veros recognized the programs and policies implemented in the wake of the Great Recession would fundamentally keep prices from falling.”
Veros monitors home prices in relation to numerous economic factors, including employment trends, natural disasters, and consumer behavior. Currently, economic indicators and geographic conditions are not consistent across the country. Many areas have experienced a rebound from earlier quarters with government stimulus and low consumer spending providing homeowners with enough money to meet mortgage obligations.
“At the onset of the Coronavirus pandemic in the United States, there was a short impact on nearly all housing markets with a month or two of softening,” said Eric Fox, Veros Vice President of Statistical and Economic Modeling. “After the initial shock, consumers embraced low interest rates and home prices returned to their pre-pandemic level and continue to move upward.”
Veros is committed to the data science of predicting home value based on rigorous analysis of the fundamentals and interrelationships of numerous economic, social, and geographic variables as they pertain to home value. This data-driven approach indicates that many of the top-performing cities are trending at a double-digit rate. This is being heavily driven by the ultra-low interest rates. “Five of the top-10-performing markets are predicted to rise more than 10 percent by Q3 2021,” said Fox.
The Western United States continues to dominate the top-10-performing cities. Idaho, Washington, Arizona, Colorado, and Utah comprise the entire list. The average annual forecast appreciation across the Top 10 cities is expected to be up 10%. Boise continues to be exceedingly strong with appreciation predicted to be 12.1% by Q3 2021.
The 10 Strongest Markets Over Next 12 Months
| Rank | Metropolitan Statistical Area (MSA) | Forecast Q3-2020 - Q3 - 2021 |
|---|---|---|
| 1 | BOISE CITY, ID | 12.1% |
| 2 | OLYMPIA-LACEY-TUMWATER, WA | 11.2% |
| 3 | SPOKANE-SPOKANE VALLEY, WA | 10.3% |
| 4 | PHOENIX-MESA-CHANDLER, AZ | 10.2% |
| 5 | BREMERTON-SILVERDALE-PORT ORCHARD, WA | 10.1% |
| 6 | OGDEN-CLEARFIELD, UT | 9.7% |
| 7 | COLORADO SPRINGS, CO | 9.3% |
| 8 | LONGVIEW, WA | 9.2% |
| 9 | SALT LAKE CITY, UT | 9.2% |
| 10 | IDAHO FALLS, ID | 9.0% |
The ten lowest-performing markets are more geographically dispersed. Texas, Louisiana and California each have cities that hold two spots on the list. New York City and San Francisco are both on the list of least-performing cities, although neither are forecast to depreciate overall, despite being hit hard by the Coronavirus pandemic. Parts of New York City are forecast to depreciate, and Manhattan is forecast to perform the worst over the next year.
The 10 Least-Performing Markets Over Next 12 Months
| Rank | Metropolitan Statistical Area (MSA) | Forecast Q3 2020 – Q3 2021 |
|---|---|---|
| 1 | MIDLAND, TX | 0.9% |
| 2 | ODESSA, TX | 1.9% |
| 3 | SAN FRANCISCO-OAKLAND-BERKELEY, CA | 2.0% |
| 4 | NEW YORK-NEWARK-JERSEY CITY, NY-NJ-PA | 2.1% |
| 5 | LAKE CHARLES, LA | 2.3% |
| 6 | PITTSFIELD, MA | 2.5% |
| 7 | BLOOMINGTON, IL | 2.6% |
| 8 | BATON ROUGE, LA | 2.7% |
| 9 | SANTA CRUZ-WATSONVILLE, CA | 2.7% |
| 10 | JEFFERSON CITY, MO | 2.7% |
Today’s pandemic-driven recession is very different than the previous recession (2007-2009) which was caused by artificially inflated house prices, loose lending practices to unqualified buyers, and inflated appraisals. This recession is not caused by housing. Rather, it is caused by a fundamentally different issue which is the Coronavirus pandemic. Current evidence exists that the economy is recovering quickly as the unemployment rate is stabilizing and first-time unemployment claims have diminished. Although, it will likely be quite some time before pre-pandemic employment returns.
Download the Q3 2020 VeroFORECAST results as an infographic.
VeroFORECAST Methodology
The quarterly VeroFORECAST reports to clients by subscription and to industry media in a summary overview. The report is a projected increase 12-months forward. The current report is based on data from 330 Metropolitan Statistical Areas (MSAs) that include 16,776 zip codes, 1,014 counties, and represent 82% of U.S. residents.
Source: Veros Real Estate Solutions
This information is intended for use by the media for economic reporting and should only be used for physical or digital publication or broadcast, in whole or in part, must be sourced as coming from Veros Real Estate Solutions. The company name should appear with the first reference of the data. If the data are illustrated with maps, charts, graphs or other visual elements, the company name must be visible on the screen or website. For questions, analysis, interpretation of the data, or permission to reproduce, contact Brian Fluhr at BFluhr@veros.com.
About Eric Fox, VP of Statistical and Economic Modeling
Eric Fox received his M.S. in Statistics and B.S. in Mathematics and Economics from Purdue University, and has 30 years of industrial experience in statistical and econometric modeling, probabilistic life methodology development, statistical training, probabilistic design software development, and probabilistic financial/competitive analysis. Fox has published numerous technical papers on probabilistic and statistical methods.
About Veros Real Estate Solutions
A mortgage technology innovator since 2001, Veros is a proven leader in enterprise risk management and collateral valuation services. The firm combines the power of predictive technology, data analytics, and industry expertise to deliver advanced automated solutions that control risk and increase profits throughout the mortgage industry, from loan origination to servicing and securitization. Veros’ services include automated valuation, fraud and risk detection; portfolio analysis, forecasting, and next-generation collateral risk management platforms. Veros is the primary architect and technology provider of the GSEs’ Uniform Collateral Data Portal® (UCDP®). Veros also works closely with the FHA to support its Electronic Appraisal Delivery (EAD) portal. The company is also making the home buying process more efficient for our nation’s Veterans through its appraisal management work with the Department of Veterans Affairs. For more information, visit www.veros.com or call 866-458-3767.
Media Contact
Brian Fluhr
Vice President of Marketing
bfluhr@veros.com or communications@veros.com
