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Lack of Millennial Home Buyers Negatively Impacting Housing Market, Says Veros’ Latest 12-Month Forecast Update

Dec 22, 2014

Santa Ana, Calif. – December 22, 2014 – Veros Real Estate Solutions (Veros), an award-winning industry leader in enterprise risk management, collateral valuation services and predictive analytics, says that whilethe percentage of residential markets expected to increase in value over the next 12 months has remained steady, dipping slightly to 82% from last quarter’s 83%, the decreasing number of first-time home buyers is influencing market softening.

The national forecast remains at +2.4% annual appreciation, consistent with the previous VeroFORECAST rate.It is the tenth consecutive quarter in which the index has shown forecast appreciation, but the pace has continued to slow.This insight comes from the company’smost recent VeroFORECAST, anationalreal estate market forecast for the 12-month period ending December 1, 2015, updated quarterly and covering 992 counties, 338metro areas, and 13,616zip codes.

The percentage of first-time homebuyers has dropped to 33%, down significantly from the long-term national average of 40% (dating back to 1981), a 27-year low.  Tighter lending restrictions, such as large cash down payment requirements and increased housing prices are causing millennials to be reluctant about jumping into the market. This, in conjunction with investors shifting out of buying homes in many markets due to higher prices, is delivering a double-blowto some markets.

“While we are seeing a worrisome drop in first-time homebuyers, there are policy changes being put into place with the intent to move the needle on the growth of this particular homebuyer, specifically with the GSEs new policy of 97% LTV,”stated Eric Fox, Veros’ vice president of statistical and economic modeling and developer of VeroFORECAST.

Fox notes that despite this single variable, there is stability in the market.  “Although the market overall is expected to be healthy with most markets appreciating,the level of forecast appreciation is certainly lower than forecasts three or four quarters ago.”

Housing supply  and unemployment rates continue to be major influencers in the national market appreciation and depreciation forecasts.Fox says. “We are seeing housing supplies down anywhere from 35% to 70% in our top markets.  Low unemployment rates and population growth, are driving housing prices upward,” he says.

“Conversely, where unemployment rates exceed the national average,the result is  increased housing supply and waning population trends, causing a forecasted decline in those areas,” Fox observes. “Similar to last quarter's forecast, the bottom performing markets continue to be in the eastern part of the nation."

Projected Twenty-Five Strongest Markets* 

1.

San Jose-Sunnyvale-Santa Clara, CA

+9.9%

2.

Bend, OR

+9.0%

3.

Houston-Sugar Land-Baytown, TX

+8.5%

4.

San Francisco-Oakland-Fremont, CA

+8.2%

5.

Santa Cruz-Watsonville, CA

+8.1%

6.

Vallejo-Fairfield, CA

+7.8%

7.

Santa Rosa-Petaluma, CA

+7.6%

8.

Austin-Round Rock, TX

+7.6%

9.

Midland, TX

+7.5%

10.

Dallas-Fort Worth-Arlington, TX

+7.4%

11.

Reno-Sparks, NV

+7.4%

12.

Las Vegas-Paradise, NV

+7.3%

13.

West Palm Beach-Boca Raton-Boynton Beach, FL

+7.2%

14.

Grand Forks, ND-MN

+7.1%

15.

Port St. Lucie-Fort Pierce, FL

+7.1%

16.

Fargo, ND-MN

+7.1%

17.

Denver-Aurora, CO

+6.9%

18.

Medford, OR

+6.9%

19.

Bismarck, ND

+6.8%

20.

Victoria, TX

+6.8%

21.

Fort Lauderdale-Pompano Beach-Deerfield Beach, FL

+6.7%

22.

Carson City, NV

+6.7%

23.

Oxnard-Thousand Oaks-Ventura, CA

+6.5%

24.

Riverside-San Bernardino-Ontario, CA

+6.5%

25.

Miami-Fort Lauderdale-Miami Beach, FL

+6.5%


Projected Twenty-Five Weakest Markets*

1.

Vineland-Millville-Bridgeton, NJ

-2.4%

2.

Sumter, SC

-2.4%

3.

Jacksonville, NC

-2.2%

4.

New Haven-Milford, CT

-2.0%

5.

Atlantic City, NJ

-2.0%

6.

Kingston, NY

-1.9%

7.

Fort Smith, AR-OK

-1.5%

8.

Decatur, AL

-1.4%

9.

Decatur, IL

-1.4%

10.

Fond Du Lac, WI

-1.3%

11.

Ocean City, NJ

-1.2%

12.

Gadsden, AL

-1.2%

13.

Greensboro-High Point, NC

-1.2%

14.

Warner Robins, GA

-1.2%

15.

Fayetteville, NC

-1.1%

16.

Pascagoula, MS

-1.1%

17.

Hot Springs, AR

-1.1%

18.

Jonesboro, AR

-1.0%

19.

Hartford-West Hartford-East Hartford, CT

-0.9%

20.

Torrington, CT

-0.9%

21.

New Bern, NC

-0.9%

22.

Bowling Green, KY

-0.9%

23.

Jackson, MS

-0.9%

24.

Binghamton, NY

-0.9%

25.

Pittsfield, MA

-0.9%

 *Markets demonstrated are for residential real estate in metro areas (typically greater than 100,000 residents) among single-family homes in the median price tier. 

Additional forecasts for U.S. markets available to the press upon request.

About Veros Real Estate Solutions

Veros Real Estate Solutions, a proven leader in enterprise risk management and collateral valuation services, uniquely combines the power of predictive technology, data analytics and industry expertise to deliver advanced automated decisioning solutions. Veros products and services are optimizing millions of profitable decisions throughout the mortgage industry, from loan origination through servicing and securitization. Veros provides solutions to control risk and increase profits including automated valuations, fraud and risk detection, portfolio analysis, forecasting, and next-generation collateral risk management platforms. Veros is headquartered in Santa Ana, Calif. For more information, please visit www.veros.com or call (866) 458-3767.

About Eric Fox, VP of Statistical and Economic Modeling:

Eric Fox received his M.S. in Statistics and B.S. in Mathematics and Economics from Purdue University, and has more than 22 years of industrial experience in statistical and econometric modeling, probabilistic life methodology development, statistical training, probabilistic design software development, and probabilistic financial/competitive analysis.  Fox has published more than 20 technical papers on probabilistic and statistical methods.

Media Contact

Morag Rich
Veros
(714)415-6341
mrich@veros.com


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