Quarterly Housing Market Update from VeroFORECAST - October 2012
Oct 10, 2012
October, 2012 Podcast Transcript - Duration: 6 minutes
Featuring Eric Fox, Veros' Vice President of Statistical and Economic Modeling
Moderator: Welcome to Veros Real Estate Solutions monthly podcast. Today Eric Fox, Vice President of Statistical Modeling for Veros will provide an overview on Viral Forecast third quarter housing market update.
Eric: Thank you Moderator, I would like to start with this quarters update, by indicating that our future forecast index has improved significantly from last quarter's minus point two percent decline. Currently we are forecasting that on average for the top hundred Metropolitan areas, we expect to see 1.1 percent appreciation over the next twelve months. So therefore, the index has crossed finely into the appreciation threshold for the first time in several years. Now, we have approximately two-thirds of the markets in the country are expected to be flat or appreciate during the upcoming twelve months.
Moderator: Now, let's get the bad news out of the way. Talk to me a bit about who VeroFORECAST is seen for the countries five weakest markets and why?
Eric: Well, our five weakest markets are currently forecast for the next twelve months to be Atlantic City, New Jersey, which is at the bottom of our list at minus 4.3 percent, Poughkeepsie, New York minus 3.3 percent, Rockford, Illinois and Norwich, Connecticut at minus 2.7 percent and likewise Allentown, Pennsylvania at minus 2.7 percent.
So, the majority of the poor performing markets are primarily in the Northeastern portion of the U.S. For example, New Jersey, Eastern Pennsylvania, Connecticut, Delaware and downstate New York are among the weakest areas, and really, unemployment remains a key discriminator between some of the bottom markets and top markets. As an example, Atlantic City has a very high unemployment rate of 13 percent, Poughkeepsie at 8.6, Rockford and 11.7, just some examples to show that their economies are not yet past the high unemployment rates.
Moderator: Which region of the U.S. seems to be the poorest performing markets?
Eric: I think in general, it is the Northeastern portion of the United States. There are pockets everywhere that are weak, but really, what we are seeing now is the Northeastern portion of the United States and notably absent from our list now are some of the internal California areas, which were leading the depreciating markets previously. Those are notably absent this time.
Moderator: Now, let us move to the lighter side. What does VeroFORECAST see for the countries five strongest markets, and what are you attributing to their position?
Eric: Well our top five markets this time; Phoenix, Arizona leads the pack again for the second time in a row at 8.3 percent appreciation. Midland, Texas, second at 7.5 percent, Boise, Idaho at 6.5 percent, Miami, Ft. Lauderdale at 6.5 percent and rounding out the top five is Denver, Colorado at 6 percent. Now, Phoenix continues to show strength building on its top ranking from one-quarter ago and it was one of the hardest markets hit during the downturn and is now leading the recovery.
Phoenix is about drastically reduced housing supply, which has plummeted over 70 percent from its peak, so they currently have great affordability, and low interest rates are causing significant demand. Their unemployment rates also very low at 7.2 percent and that is helping as well.
In addition, we are seeing a lot of these larger markets in the top five also have low unemployment rates. Midland for example, is 3.8 percent unemployment with a booming economy due to the oil sector. Boise's unemployment rate is also relatively low at 7.4 percent, with a very drastically reduced housing supply. Miami is seeing very strong demand from international buyers and it supply is quite low and likewise the Denver housing supply is quite low.
Moderator: We have just a little bit of time left. Can you offer a final thought for our listeners on what to expect or watch for in the next twelve months?
Eric: Sure, I think overall the recovery in the housing market is forecast to continue to accelerate. We have been consistent in saying the recovery will be lengthy and gradual and it has been. Now, I think we are finally over the hump with appreciation being the forecast norm instead of depreciation. Although some markets are still forecast to show signs of weakness.
Moderator: Eric, Thank you. We appreciate your time and for our listeners, additional information can be found in our newsroom on Veros.com. Please follow our Twitter handle @VerosRES, for breaking news.