According to the latest market forecast from Veros Real Estate Solutions [1], released Thursday, 83 percent of American homes are appreciating, especially in markets west of the Mississippi. In fact, the top 25 markets are west of the river.
In contrast, 24 of the weakest 25 markets are east of it.
This quarter is the ninth consecutive to show forecast appreciation, but the pace has continued to slow down, according to Veros.
Part of the reason for the apparent juxtaposition could be that Veros has expanded the reach of what it is looking at. The latest VeroForecast includes more smaller markets nationally—such as Midland, Texas, and Medford, Oregon—rather than concentrating on just the major metros. Either way, the numbers suggest healthy growth that does not appear to be a sign of a bubble.
Still, the markets east and west of the Mississippi River show some pretty stark differences.
"The Mississippi River now has the distinction of being the unofficial dividing line of the top 25 and the majority of the bottom 25 markets in the country," said Eric Fox, Veros' VP of statistical and economic modeling and the developer of the VeroFORECAST. "All of the top 25 markets are west of the Mississippi, and with the exception of Hot Springs, Arkansas, the entire bottom 25 group is found east of the river."
This is not to suggest that all markets to the west are appreciating, nor that all those to the east are struggling. But those that are doing well are showing excellent growth. The top five markets in which home values have increased almost 10 percent since last quarter are all in Texas and California. These two states make up most of the top 25, followed by markets in Oregon and Washington, where appreciation growth is more than 7 percent.
Fox said the trend in appreciation nationally is mostly about housing supply, while in less-performing markets, population exodus is a major factor driving down the rate of appreciation.
"Not unexpectedly, prices will rise where supplies are low," Fox said. "In the bottom-forecast markets, declining population trends are a key variable for the sixth straight quarter. Populations follow jobs, and housing supplies are often slow to keep pace with demand supported by increased employment."