NEW YORK (MainStreet) The housing market has bounced back dramatically since the 2008 recession, but conditions have started to slow, a new survey says.
Veros reports 20% of homes are expected to lose value, while 80% are set to gain value.
Still, the housing market is yearning for a boost, instead of simply pent up demand from an unusually cold winter, which hampered economic growth and caused slightly stronger housing numbers towards the end of first quarter and the beginning of second quarter.
The report, which forecasts prices for the next 12 months, has shown price increases over the past eight quarters in a row, but in this latest forecast, prices have started to slow.
"San Jose housing supplies are down and San Francisco is seeing a serious housing shortage," says Eric Fox, Veros' vice president of statistical and economic modeling and developer of VeroFORECAST. "Inventories in both are down 70 percent from their peak in 2008 and demand is outstripping supply, leading to price run-ups and decreased affordability despite low interest rates," he says. "There just aren't enough houses available that people can afford to buy, so those that remain are hotly contested."
A slowdown in the pace of buying isn't necessarily something to worry about when it comes to the health of the housing market, as this could bring price stabilization.
"We've been seeing major price swings over the last seven years and stabilization will be positive and will provide predictability to the market," says Dani Babb, Broker/President of The Babb Group Real Estate, Inc. "Some appraisers can't even figure out how to value homes because of the swings."
Unpredictable prices make conditions difficult for sellers who are trying to score the best price and buyers who may delay purchases if the market is telling them a significant price drop is on the horizon.
Real estate is local and even in a healthy real estate market, different zip codes progress at different paces.
"The common denominators are jobs, population and inventory," Babb adds. "We see strength in the areas where jobs are moving to instead of away from and vice versa."
Last week, the National Association of Realtors said June inventory increased 2.2% to 2.3 million homes for sale. This represents a 5.5-month supply, the same level as May.
Areas with higher inventory puts downward pressure on prices as sellers face more competition and buyers benefit from more choice.
"Keep a close watch on prices and inventory and when you see more homes on market, you have better shot of getting a descent price," Babb adds. "If your area has a strong job market and inventory is low, these are the conditions needed to get the best price."
Per the report, strongest forecasted markets are:
- 1. San Jose-Sunnyvale-Santa Clara, Calif. 10.6%
- 2. San Francisco-Oakland-Fremont, Calif. 10.5%
- 3. Austin-Round Rock, Texas 10.0%
- 4. San Diego-Carlsbad-San Marcos, Calif. 9.0%
- 5. Houston-Sugar Land-Baytown, Texas 8.9%
The weakest markets are expected to be:
- 1. Rockford, Ill. -3.4%
- 2. Trenton-Ewing, N.J. -2.9%
- 3. Scranton-Wilkes-Barre, Pa. -2.6%
- 4. Poughkeepsie- Newburgh-Middletown, N.Y. -2.5%
- 5. Atlantic City, N.J. -2.2%
- Written by Scott Gamm for MainStreet. Gamm is author of MORE MONEY, PLEASE