Quarterly Housing Market Update from VeroFORECAST.
Jan 10, 2012
Featuring Eric Fox, Veros' Vice President of Statistical and Economic Modeling
January, 2012 Podcast Transcript - Duration: 5 minutes
Moderator: Welcome to Veros Real Estate Solutions monthly podcast. Today Eric Fox, our vice president of statistical modeling, will provide an overview on Vero forecast fourth quarter housing market update.
Eric: Thanks, Emily. I’m glad to be here and I just wanted to let you know that our national house price change we forecast to be at 1.3 percent depreciation over the next 12 months and that’s an improvement from three months ago when it was 1.7 percent depreciation. So things are improving but very gradually and when we break that down and look at the top five and bottom five markets, those markets in the top five are seeing appreciation in the three to four percent range, where those in the bottom five are seeing five to six percent depreciation.
Moderator: Will we see the bottom of the housing slump in 2012? It seems like we should be getting close.
Eric: It appears so. On a national level 2012 should be the turn around here, which means flat. It does not mean we are going to have a return to five percent appreciation nationally. So that necessarily means that although overall it will be looking relatively good, we’ll still have many good markets that are appreciating let’s say five percent a year and many markets that are not doing well, which will be depreciating at rates likely to be around five percent a year. So it will be a mixed bag.
Moderator: On a National level, what are the factors that are making the biggest impact in the appreciating and depreciating markets?
Eric: Well for our strong appreciating markets we see that low unemployment and therefore a net end flex of population is really the key driver. In our top five appreciating markets our unemployment rates range from around three and a half percent to around six and a half percent, and this is significantly better than the national unemployment rate, which is still in the eight and a half to nine percent range. So folks in those markets feel comfortable that they’re going to have employment and can take advantage of the historical low interest rates that we’re seeing at this time. On the other hand, in the depreciating markets these markets are characterized by very high unemployment rates, typically in the 13 to 17 percent range. So there even though we have very low interest rates people don’t feel as comfortable to take advantage of those and as a result the housing supply there is still very high and we have to work through that housing supply before these markets can recover.
Moderator: What can we expect from some of the hardest hit markets? Will they experience any sort of recovery?
Eric: Well here it really depends. I think for some markets like Las Vegas which was hit very hard, the supply of homes in Las Vegas as well as the unemployment rate is still very high, and so since the supply is so high that market is not going to be recovering anytime soon. However, if we contrast that market to say that of Miami, which was also very hard hit, that market has absorbed approximately two thirds of its housing supply inventory and now has a very healthy supply. So that market where in fact forecasting to be flat for the next 12 months, so very different story for two similarly hard hit markets.
Moderator: Okay, we have just a little bit of time left Eric. Is there anything else you’d like to add?
Eric: I think the key is that we are seeing improvement, we are seeing recovery. It’s going to be very gradual and this has been consistent as to what we’ve been saying over the last two or three years, but it is getting better.
Moderator: Great. Thanks, Eric. We really appreciate your time today. For more information please visit the newsroom on Veros.com or follow us on twitter @VeroRES. Thank you.