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Veros Predicts Sharp Decline in Home Price Appreciation Rates Due to COVID-19 Pandemic

VeroFORECAST projects average annual home price appreciation to drop to 1.9% in the short-term due to the impact of coronavirus.

SANTA ANA, Calif., April 6, 2020—Today Veros Real Estate Solutions, an industry leader in enterprise risk management and collateral valuation services, announced that Q1 2020 VeroFORECAST™ data indicates an average projected appreciation rate for residential real estate in the nation’s largest 100 housing markets will only increase on average 1.9% through the first quarter of 2021. This forecast has adjusted down sharply from previous projections due to massive unemployment and economic uncertainty across the country as a result of the global COVID-19 pandemic.

“Home price trends and forecasts certainly take a backseat to more pressing health and safety issues during this unprecedented tragedy. While we expect a softening of house prices in the near-term, we anticipate a rebound when the COVID-19 pandemic subsides,” said Darius Bozorgi, CEO of Veros Real Estate Solutions. “The fundamental economic principles under which housing has been operating in recent years are solid. Real estate prices will be poised to recover when we see employment return across the nation.”

Veros acknowledges that the country may already be heading into a recession, although it is very different from the previous downturn that began in 2007. At that time, artificially inflated house prices, suspect underwriting practices and unqualified buyers, as well as inflated appraisals, led to those circumstances. Today’s potential recession is not a result of risky lending, but rather the unprecedented, rapidly evolving impact of the COVID-19 pandemic. Therefore, a dramatic drop in house prices in the long-term is not forecast at this time, but only a more modest short-lived softening through the second quarter of 2020.

“Right now, we see economic variables at odds across the country,” said Eric Fox, Veros Vice President of Statistical and Economic Modeling. “On one hand, we have historically low interest rates that typically stimulate demand and increased prices. On the other hand, unemployment is rising rapidly and GDP is falling quickly which normally drives house prices down. Finally, we have many people who have taken their homes off the market, reducing supply, and many buyers sitting on the sidelines temporarily, reducing demand. This reduced demand/supply scenario isn’t really pushing prices up or down. The combination of all of these factors results in mild forecast depreciation on average for the next quarter with a return to normal appreciation rates later in the year and into 2021.”
The ten markets forecast to increase the most between Q1 2020 and Q1 2021 are primarily located in Washington, Arizona, and Idaho, with one outlier in Colorado. In the strongest markets, the defining factor is the very low housing supply, which forces prices to increase much more rapidly than in other markets. The average annual forecast appreciation of the top ten is only 5.6%, which is down from nearly 8% during last quarter’s update. For example, Spokane, WA experienced a drop in appreciation average from 10.1% to 6.4%, which is a drop of over a third from the previous forecast.

The 10 Strongest Markets Over Next 12 Months

Rank Metropolitan Statistical Area (MSA) Q1 2020 – Q1 2021
1 Boise City-Nampa, ID 7.6%
2 Spokane, WA 6.4%
3 Idaho Falls, ID 6.3%
4 Sierra Vista, AZ 5.8%
5 Olympia, WA 5.6%
6 Phoenix-Mesa-Glendale, AZ 5.3%
7 Colorado Springs, CO 4.9%
8 Longview, WA 4.9%
9 Yakima,WA 4.8%
10 Eugene, OR 4.8%

For the next 12 months, we expect 10% of all markets to depreciate (this is sharply up from only 1% of all markets expected to depreciate annually just one quarter ago). The average annual forecast depreciation of the bottom ten is -1.3%. Chicago, IL is a specific example of the depreciation over the previous forecast with a drop from 0.7% to -2.3%. However, this forecast is not as cataclysmic as it was during the previous 2008 recession.

The 10 Least-Performing Markets Over Next 12 Months

Rank Metropolitan Statistical Area (MSA) Q1 2020 – Q1 2021
1 Baton Rouge, LA -2.3%
2 Chicago, IL -2.3%
3 Bridgeport-Stamford-Norwalk, CT -1.5%
4 Champaign, IL -1.5%
5 Springfield, IL -1.0%
6 Bloomington, IL -1.0%
7 Hartford, CT -0.9%
8 Wheeling, WV -0.9%
9 Peoria, IL -0.9%
10 New Haven, CT -0.8%

Housing supply is a key discriminator between the top and bottom forecast market performance. Population trends are also a variable responsible for the performance of the bottom forecast markets. Namely, either slow population growth or population declines are contributing to low demand in these areas. Many of the cities identified in the least-performing ten markets are in very slow-growth metros.

We are in an unprecedented time that is testing the stability and strength of every human and our economy’s ability to withstand these unique circumstances. The United States has proven its strength prior to the COVID-19 pandemic, and although there may be some downturn, Veros expects we will get back on our feet quickly once the nation is back to work.

Download the Q1 2020 VeroFORECAST results as an infographic.

VeroFORECAST Methodology
The quarterly VeroFORECAST reports to clients by subscription and to industry media in a summary overview. The report is a projected increase 12-months forward. The current report is based on data from 334 Metropolitan Statistical Areas (MSAs) that include 16,935 zip codes, 1,039 counties, and represent 82% of U.S. residents.

Source: Veros Real Estate Solutions
This information is intended for use by the media for economic reporting and should only be used for physical or digital publication or broadcast, in whole or in part, must be sourced as coming from Veros Real Estate Solutions. The company name should appear with the first reference of the data. If the data are illustrated with maps, charts, graphs or other visual elements, the company name must be visible on screen or website. For questions, analysis, interpretation of the data or permission to reproduce, contact Brian Fluhr at

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 30 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 numerous technical papers on probabilistic and statistical methods.

About Veros Real Estate Solutions
A mortgage technology innovator since 2001, Veros is a proven leader in enterprise risk management and collateral valuation services. The firm combines the power of predictive technology, data analytics, and industry expertise to deliver advanced automated solutions that control risk and increase profits throughout the mortgage industry, from loan origination to servicing and securitization. Veros’ services include automated valuation, fraud and risk detection; portfolio analysis, forecasting, and next-generation collateral risk management platforms. Veros is the primary architect and technology provider of the GSEs’ Uniform Collateral Data Portal® (UCDP). Veros also works closely with the FHA to support its Electronic Appraisal Delivery (EAD) portal. The company is also making the home buying process more efficient for our nation’s Veterans through its appraisal management work with the Department of Veterans Affairs. For more information, visit or call 866-458-3767.

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