Post-coronavirus home price growth could be highest in these cities
With spiking unemployment and financial uncertainty looming, home prices are expected to grow at half the rate that was projected before the COVID-19 outbreak, according to Veros Real Estate Solutions.
Among the 100 largest housing markets in the country, Veros expects a 1.9% average annual appreciation rate through the first quarter of 2021. In early March, the real estate valuator projected a rate of 3.9% through the end of 2020, given that housing appreciation showed signs of flattening compared to the past few years and the COVID-19 outbreak had already started to stifle home buying. The new, lower projection takes into account rising unemployment and a falling GDP.
"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," Eric Fox, vice president of statistical and economic modeling at Veros, said in a press release.
The markets with the strongest forecasts all reside in the western half of the U.S. The report predicts that Boise, Idaho, will see a 7.6% year-over-year price appreciation in the first quarter of 2021. Spokane, Wash., follows at 6.4% as well as 6.3% for Idaho Falls, Idaho, and 5.8% in Sierra Vista, Ariz.
Conversely, Veros expects home prices in Baton Rouge, La., and Chicago to both fall 2.3%, with Bridgeport, Conn., and Champaign, Ill., each dropping 1.5%. About a tenth of all markets should anticipate annual depreciating values, up from just 1% in the first quarter of 2020.
Since housing wasn't the main driver for the current economic calamity, as it had been in the last downturn, the market stands a better chance to recover quickly once the crisis is over.
"Home price trends and forecasts certainly take a backseat to more pressing health and safety issues during this unprecedented tragedy," said Darius Bozorgi, CEO of Veros Real Estate Solutions.
"While we expect a softening of house prices in the near-term, we anticipate a rebound when the COVID-19 pandemic subsides. 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."