1st Quarter Housing Market Update from VeroFORECAST
Apr 04, 2012
Featuring Eric Fox, Veros' Vice President of Statistical and Economic Modeling
April, 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 Veros forecast first quarter housing market update in 2012.
Eric: Thanks, Emily, I’m excited to be here today. I wanted to talk a little bit about what we’re seeing in our top 10 and bottom 10 markets. In our top 10 markets we’re forecasting appreciation between two and five percent over the next 12 months. And in our bottom 10 markets we’re forecasting between four and six percent depreciation. So things are improving slowly but we are starting to see a little bit of acceleration in that trend.
Moderator: As you just stated, our most recent forecast update is predicting a significant improvement in the home price index. Is this the bottom of the housing slump?
Eric: Well overall at a national level our forecast has gone last quarter from a -1.3% depreciation to a -.85% depreciation. So there’s still a slight depreciation overall expected at a national level and I guess I would officially say we were at the bottom when that number reached 0%, so I would be reluctant to say bottom yet. However on a national basis, we’re seeing some markets that definitely have recovered and some that are still going to struggle for some time.
Moderator: Will you talk some more about the forecast and some of the hardest hit markets?
Eric: Well we’re really seeing a dichotomy right now. For example, one hard hit market such as Las Vegas still has fundamentals in place where we’re going to see significant depreciation there for quite some time to come. For another hard hit market like Miami, things look a bit better there and we see things are going to be flat for the future. On other hard hit markets like Phoenix we’re seeing just the opposite. We’re seeing the potential for some very strong appreciation in that market so really it’s a market by market assessment of how some of these hard hit markets are going to be recovering.
Moderator: As you noted Phoenix is making a big come back with significant appreciation. What’s caused this sector to start such a rapid recovery?
Eric: Well in Phoenix the revival is all about drastically reduced housing supply which is plummeted by almost 70 percent from its peak. It also with pricing that has come way down it now has great affordability. That, combined with low interest rates is also causing significant demand so the low supply and high demand in conjunction with good economy in Phoenix is really giving that possibility for strong appreciation.
Moderator: On the opposite spectrum from Phoenix is Bakersfield California. This housing market has stayed at the bottom for the past three quarters, what is keeping it down and how can it start to recover?
Eric: Well Bakersfield is going to be a challenge, for example their unemployment rate currently stands at 14.3% compared to a national rate of just a little bit over 8%. And inventory has come down a little in Bakers Field but it’s still quite high and that in conjunction with the high foreclosure and mortgage delinquency rates is going to keep pressure on that market for quite some time to come.
Moderator: We have just a little bit of time left, is there anything else?
Eric: Yes just one general comment. I think what we’re seeing as some of the key variables that are helping us separate the top performing markets from the bottom performing markets, unemployment is one of the key drivers. When we look at the difference in unemployment in some of our bottom markets, they have unemployment rates between 11% and 15%, so that means that it is going to be tough for those markets to recover anytime soon. Also housing supply in many of our bottom performing markets is also quite high compared to the top markets. So again, that’s going to cause them to take a long time to recover.
Moderator: Okay great. Thanks, Eric we really appreciate your time today. For more information or to view the forecast update in full please visit the news room at Veros.com or follow us on Twitter @VerosRES. Thank you.