National Home Prices To Rise 3% In 12 Months, California Leads With 13% Increase

by Broderick Perkins

 The “as goes California” market prediction is showing up in a new forecast that predicts home prices nationwide will improve by 3.1 percent, while the Golden State will lead the way with gains of up to 13 percent.
Veros Real Estate Solutions’ real estate market forecast “VeroFORECAST,” says for the next 12 months, ending in June 1, 2014, San Francisco’s break away housing market will yield a home price boom of 12.7 percent.

Closely on the heels of the City By The Bay, the Los Angeles-Long Beach-Santa Ana, CA region will see home prices rise by 11.6 percent; followed by Silicon Valley-San Jose-Sunnyvale-Santa Clara, CA, 11.1 percent; Midland, TX, 11.1 percent and Phoenix-Mesa-Scottsdale, AZ, 10.9 percent.

Homebuyers are sweating bullets in San Francisco, where the supply of homes is down nearly 80 percent from its peak in 2008. Always an expensive housing market, Don’t-Call-Me-Frisco does offer housing affordability at 2004 levels, according to Veros.

Along with relatively low unemployment, similar factors play out in the Los Angeles area and especially Silicon Valley (San Jose metro), where home prices have already surpassed peak prices of the last boom.

Trouble towns

Vero’s forecast also reports the Northeast continues to struggle, albeit less so. Higher unemployment rates and pockets of population decline are keeping some Northeast markets from gaining ground on the home price front.

Still struggling at the bottom of the heap are, Poughkeepsie-Newburgh-Middletown, NY, where prices are expected to fall 2.9 percent over the next 12 months, followed by Kingston, NY, down 2.1 percent; Norwich-New London, CT, down 1.9 percent; Bridgeport-Stamford-Norwalk, CT, down 1.8 percent and Atlantic City, NJ, where Tropical Storm Sandy is still evident, down 1.6 percent.

Vero’s latest quarterly forecast says 90 percent of U.S. markets are expected to see home price appreciation, with the remainder still experiencing price declines.

That’s an improvement over the last quarter’s forecast for a 75-25 percent split in appreciation or depreciation.

“We have been consistent in our position over the past year that the recovery will be lengthy and gradual, which it has been, while many were talking about a ‘shadow inventory’ pulling the housing market back down and creating another recession,” said Eric P. Fox, vice president of statistical and economic modeling for Veros.

Fox added, “Now we are finally over the hump with appreciation being the forecast norm. That is to say, we are seeing the first signs a year or two from now that the rapid increase of prices will slow a bit in many parts of the country. However, we don’t foresee drastic slowing – simply some moderation.”