Bottom’s up: Here are 10 markets projected to see depreciation
See which markets are projected to depreciate or stay the same.
Nine of the 354 Metropolitan Statistical Areas included in the latest VeroFORECAST of projected real estate values are predicted to depreciate in the next year. While that can’t be encouraging for homeowners in those markets, the gloomy forecast has a silver lining, albeit a thin one.
The new report’s “bottom 10” have average depreciation of 0.72%, up from 0.85% depreciation in the first quarter report. Atlantic City, the lowest ranking market last quarter, is expected to depreciate far less between June 1, 2018 and May 31, 2019, with a -1% projection compared to the -2.9% projection released in late March.
Of the previous quarterly report’s 10 MSAs predicted to depreciate or remain unchanged over the next year, seven moved up and out of the bottom list this quarter.
The second quarter VeroFORECAST, released in late June by Veros Real Estate Solutions, also predicts the overall national average of real estate values will tick up a tenth of a percent through May 2019. That overall national average went from 4.3% last quarter to 4.4% this quarter, with five of the top 10 from the first quarter report again in the top 10 for appreciation this quarter.
The 10 markets that are projected to either depreciate or remain unchanged over the next 12 months are:
- Cumberland, Maryland-West Virginia (-1.6%)
- Farmington, New Mexico (-1.1%)
- Gettysburg, Pennsylvania (-1%)
- Atlantic City-Hammonton, New Jersey (-1%)
- Peoria, Illinois (-0.7%)
- Fort Smith, Arkansas-Oklahoma (-0.7%)
- Jackson, Mississippi (-0.5%)
- Hartford-West Hartford-East Hartford, Connecticut (-0.4%)
- Joplin, Missouri (-0.3%)
- Bridgeport-Stamford-Norwalk, Connecticut (0%)
Seventy percent of these MSAs are in the East and South, stretching from Connecticut through Pennsylvania and New Jersey, down through Maryland to Mississippi and Arkansas. There are two Midwest entries – Peoria, Illinois and Joplin, Missouri – that with Atlantic City are the only holdovers from the first quarter bottom 10 report.
Forecasts for these two MSAs have improved over the previous report: Peoria by a tenth of a percent and Joplin by more than a full percentage point. Farmington, New Mexico, is the only market in the Western half of the country to land among the 10 markets projected to either depreciate or remain the same.
Population trends are a key variable used to create these forecasts. For those MSAs at the bottom of the forecast, either slow population growth or population declines are contributing to low demand. Many of them are in very slow growth metros.
Eleven of the bottom 25 markets are in the Northeastern states, while eight of those 25 are in the deep South states of Louisiana, Alabama, Arkansas and Mississippi. North Dakota, Maryland and Louisiana are also looking to perform worse compared to previous forecast periods.
The 354 MSAs included in this quarter’s VeroFORECAST – which is a dozen more than last time – represent 1,005 counties and 13,877 ZIP codes. In terms of population, the residences – both SFRs and condos / townhomes – house 82% of Americans.
Source: Housing Wire