Veros Real Estate Solutions has released its 2023 Q3 VeroFORECASTSM which anticipates nationwide home prices, on average, are expected to increase 2.4% over the next 12 months, compared to last quarter’s forecast of a 2.2% increase, signaling a continued rise in prices.
As the new year takes off, the woes of 2023’s housing market challenges continue to echo into this year, with low supply and unaffordability remaining “at the forefront of the housing market”, according to the report.
In December, the Federal Reserve decided to maintain current interest rates but hinted at three potential rate cuts in 2024. Mortgage rates have already dipped to 6.6% in response, yet predictions suggest they won’t fall below the mid-six percent range.
While mortgage rates have dropped by more than a whole percentage point from the highs reached in October 2023, the overall affordability of homes remains a concern. Even when rates were lower than 6.6% during most of the first half of 2023, they failed to entice sufficient homebuyers or sellers into the market.
Top 10 Strongest-Performing Markets Over the Next 12 Months:
- Rochester, NY
- Akron, OH
- Allentown-Bethlehem-Easton, PA-NJ
- Greensboro-High Point, NC
- Lancaster, PA
- Canton-Massillon, OH
- Cincinnati, OH-KY-IN
- Hartford-East Hartford-Middletown, CT
- Manchester-Nashua, NH
- Springfield, IL
While one might expect that mortgage-free homeowners could contribute to the supply, hurdles such as limited options and high prices persist. At least a third of mortgage-free homes are owned by baby boomers, and this percentage is expected to rise in the coming years.
Warmer-climate destinations like Florida, a preferred choice for retirees, have become increasingly costly. Moreover, older Americans are choosing to continue to work and not give up their current lifestyles. Those expecting a tsunami of homes to hit the market as baby boomers retire and downsize will have to wait a while.
Top 10 Least-Performing Markets Over the Next 12 Months:
- Waco, TX
- Midland, TX
- St. George, UT
- Brownsville-Harlingen, TX
- Beaumont-Port Arthur, TX
- Austin-Round Rock-Georgetown, TX
- Lake Charles, LA
- Idaho Falls, ID
- Boise City, ID
- Las Vegas-Henderson-Paradise, NV
In comparison, the housing market has experienced sustained demand, fueled by millennials forming households and eager first-time homebuyers awaiting more housing opportunities. First-time homebuyers are actively exploring affordable destinations, with a particular focus on the northeast and Midwest regions.
Cities in these areas still offer not only affordable housing options but also a lower cost of living than in coastal regions, a higher quality of life, promising economic prospects, and family-oriented communities. The rise of remote work has made it feasible for individuals to live in more affordable areas while maintaining employment with companies located elsewhere.
Just a year ago, the top-performing markets based on the VeroFORECASTSM were in North Carolina, Nebraska, and Kansas.
However, the landscape has shifted, with the latest forecast placing Rochester, NY, as the leading market. Three cities in Ohio, two in Pennsylvania, and one each in Connecticut, New Hampshire, and Illinois feature on the top 10 list. Greensboro, NC, is the sole market outside the Midwest or northeast to make the cut. Each of these metros is projected to appreciate in the 5.3%–7% range.
To read the full report, including more data, charts, and methodology, click here.
