2Q 2012 Quarterly Housing Market Update from VeroFORECAST
Jul 01, 2012
July, 2012 Podcast Transcript - Duration: 5 minutes
Featuring Eric Fox, Veros' Vice President of Statistical and Economic Modeling
Moderator: Welcome to Veros Real Estate Solutions monthly podcast. Today Eric Fox, our vice president of statistically modeling, will provide an overview on Vero forecast second quarter housing market update.
Eric: Thanks, Moderator. I’m excited to be here today. I wanted to talk just a little bit about an overview of what our national forecast looks like for the next 12 months and we’re seeing it’s going to be down by about minus .2%, which is basically flat, and that certainly is significant improvement over what we’ve seen over the past several years. Our top five markets are showing appreciation between about three and a half percent and six and a half percent. Our bottom five markets are showing depreciation between about 4% and 5%, so overall things are getting better and that is accelerating.
Moderator: Great, since we’re predicting that the market is going to be flat, one of the other big headlines is that in select markets there’s going to be more notable appreciation that we’ve seen in a while, where are you seeing that emerging appreciation and what is filling those increases?
Eric: Well, in our top five markets if we look at places like Phoenix that’s our top performing market forecast appreciated 6.4% over the next 12 months, Boise at 3.8, Boulder Colorado at 3.6, Bismarck, North Dakota at 3.5 and the Denver area at 3.3 and really I think the bottom line is that overall unemployment in these top five markets is a low 6.4%. People feel fairly comfortable about their local economies, the housing supply is definitely down from the peak, and in combination with low interest rates people feel comfortable to buy a home and I think that’s what’s going on in the majority of these top five markets.
Moderator: One of the other big messages is that Phoenix is experiencing the biggest rate of appreciation in this quarters update and even last quarter was the first time that Phoenix appeared on the top ten rate for VeroFORECAST. What exactly is Phoenix doing right in order to get this position consecutively and even demonstrate higher forecast of appreciation than the prior quarter? Can it be sustained?
Eric: Well I think that the Phoenix market is really all about the drastically reduced housing supply which is down now over 70% from the peak, which was several years ago.
So there’s great affordability now since prices came down significantly. Interest rates are also relatively low and that’s causing significant demand. Also Phoenix has a fairly low unemployment rate at 7.4% which is actually going down quite quickly and so it’s just really got all the perfect ingredients to be the top performing market and I don’t see that changing anytime soon. The housing supply now is only around one or two months’ supply which is extremely low. The only way that’s going to starve that off is if the housing supply goes up which, clearly takes time.
Moderator: On the other end of the spectrum we have the Reno-Sparks Region in Nevada and they landed at the bottom spot this quarter. They’ve been struggling for some time. What needs to happen in that area to start a recovery?
Eric: Well Reno is really suffering from very high unemployment, it’s about 11.5% and their housing inventory is still fairly high. It’s down from the peak a little bit but not noticeably. So that, in conjunction with the high foreclosure and delinquency rates is really keeping pressure on that market and in fact Nevada’s foreclosure rate has lived the nation over the last four years. So in order for Reno to get better the economy has to improve and supply has to come down.
Moderator: We’ve got just a little bit of time left. Is there anything else you’d like to add?
Eric: Well things are definitely getting better and starting to accelerate so I expect by the time we’re here next quarter this time we are going to see even a brighter picture.
Moderator: Alright, Thanks Eric. We certainly appreciate your time. For our listeners, additional information can be found in our newsroom on Veros.com. Please follow our twitter handle @VerosRES for breaking news. Questions and feedback can be submitted to media@Veros.com. Thank you.