...Pushing Buyers to Chase Affordability
Smaller metro areas are beckoning future homeowners, offering a trifecta of incentives - affordable housing, employment opportunities, and better quality of life.
SANTA ANA, Calif.--(BUSINESS WIRE)--Veros Real Estate Solutions (Veros®), an industry leader in enterprise risk management and collateral valuation services, released its 2023 Q3 VeroFORECAST℠ that anticipates that home prices are expected to increase on average 2.2% over the next 12 months, compared to last quarter’s forecast of 1.7% increase, indicative of a steady market.
VeroFORECAST evaluates home prices in over three hundred 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 values.
In the current discussions surrounding the housing market, one issue reigns supreme: the scarcity of available homes for sale. “Forecasts suggest that this predicament is here to stay for the foreseeable future, stretching into months, and quite possibly, a couple of years,” said Reena Agrawal, Research Economist at Veros Real Estate Solutions. “The chief culprit behind this housing conundrum is the expectation of prolonged high mortgage rates. This is because the Federal Reserve is likely to hold interest rates higher for longer to combat inflation and will probably increase rates further. Adding to this supply squeeze is the high cost of construction, which places a substantial damper on the prospect of new housing stock entering the market.”
Yet, the story of the housing market is not a one-sided narrative. Agrawal added that “despite the headwinds created by elevated interest rates, demand is exhibiting a surprising tenacity. A noteworthy trend is that a full third of all home purchases transpire through all-cash transactions, underscoring the persistence of home-buying activity. Furthermore, millennials are making their mark on the housing landscape. These young buyers are not going it alone; many receive substantial financial backing from their affluent baby boomer parents. This dynamic brings an interesting twist to the market, wherein high-interest rates predominantly affect a subset of potential buyers, some of whom are exploring more cost-effective avenues, while others contemplate deferring homeownership for another time.”
Against the backdrop of soaring housing costs, smaller cities are emerging as havens of affordability and tranquility. Nine of the ten strongest performing markets based on the Q3 2023 VeroFORECAST boasted median sale prices for existing homes under the $350,000 mark—well below the national median. Rochester, NY, tops the list of best performers. The other metros expected to do well are in Ohio, North Carolina, Kansas, and New Hampshire. Each of these metros is projected to appreciate in the 5% to 6.5% range.
THE 10 STRONGEST-PERFORMING MARKETS OVER THE NEXT 12 MONTHS
The appeal of a more balanced lifestyle is steering individuals and families toward these urban enclaves. The surge in remote work has provided some people the liberty to choose their place of residence based on personal preference rather than proximity to a workplace. Moreover, the longing to be close to family members has grown more profound, a desire heightened by the pandemic's turbulent times.
Major metros, like San Francisco, Los Angeles, and Seattle, on the west coast and New York on the east, are known for their high cost of living and skyrocketing housing prices, which can be prohibitive for many individuals and families. The sunbelt region has not been immune to the housing affordability crisis either. Some sunbelt cities, particularly in states like Texas and Florida, that grew rapidly during the pandemic, have experienced a substantial increase in housing costs. The worst ten performing cities based on the VeroFORECAST are in California, Idaho, Texas, Utah, and Washington. All three metros in Utah, Boise, and Austin boast median house prices at or above the $500,000 mark. Seattle, San Francisco, and Santa Rosa have even higher median prices. Stockton, CA and Brownsville, TX round up the bottom ten list, not holding much appeal in terms of economic opportunities. These ten metros are expected to depreciate modestly in the -2% to -4% range.
THE 10 LEAST-PERFORMING MARKETS OVER THE NEXT 12 MONTHS
The quarterly VeroFORECAST reports to clients by subscription and to industry media in a summary overview. The current report is based on 311 Metropolitan Statistical Areas (MSAs) data, including 16,734 ZIP codes, 971 counties, and 82% U.S. residents. The report is a projected increase twelve months forward.
Download the Q3 2023 – Q3 2024 VeroFORECAST results as a PDF infographic.
Download the 10 Strongest-Performing Markets graphic only.
Source: Veros Real Estate Solutions (Veros®)
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, and must be sourced from Veros Real Estate Solutions. The company name must be visible on the screen or website if the data are illustrated with maps, charts, graphs, or other visual elements. For questions, analysis, interpretation of the data, or permission to reproduce, contact firstname.lastname@example.org.
About Reena Agrawal, Research Economist
Reena Agrawal has a Ph.D. in Economics from Vanderbilt University. She has fifteen years of experience in macroeconomic forecasting, sectoral research, feasibility studies of complex projects, and preparing reports for multi-national clients.
About Veros Real Estate Solutions (Veros®)
A mortgage technology innovator since 2001, Veros is a proven leader in enterprise risk management and collateral valuation services. The firm combines 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.