After nearly two years of frenzied price appreciation, home price gains are expected to drop off, according to the latest report from Santa Ana, California-based Veros Real Estate Solutions, a provider of enterprise risk management, collateral valuation, and predictive analytics.
However, Veros does not cast a negative outlook for the market. Rather, the firm anticipates a stable market with slow price appreciation.
“The wave of appreciation may have crested, but it has been an impressive recovery in many respects,” said Eric Fox, VP of statistical an economic modeling at Veros.
“The market is stabilizing and the overall outlook is very positive,” he added.
Veros predicts price appreciation will average 3.4 percent in the largest 100 metros over the next twelve months, according to its latest quarterly report. It its previous report, Veros predicted 5.1 percent appreciation.
Veros attributes slowing price appreciation to rising interest rates and declining affordability.
Among the 100 largest metros, three of the top five for forecasted price appreciation are located in California—San Jose-Sunnyvale-Santa Clara, California (9.7 percent); Los Angeles-Long Beach-Santa Ana, California (9.3 percent); and San Francisco-Oakland-Fremont, California (8.8 percent).
Midland, Texas (9.3 percent), and Bismark, North Dakota (9.1 percent), also made it in on Veros’ top five list.
On the other hand, prices are expected to fall in a few large metros, including Atlantic City, New Jersey (-2.5 percent); Norwich-New London, Connecticut (-1.7 percent); Fayetteville, North Carolina (-1.6 percent); Rockford, Illinois (-1.6 percent); and Winston-Salem, North Carolina (-1.6 percent).
“We are seeing continued signs that a year or two from now the rapid increase of prices will slow in many parts of the country,” Fox said, adding, “Importantly, we don’t foresee drastic slowing—simply some moderation.”