Large Housing Markets Forecast to Depreciate Significantly

Home prices are expected to appreciate on average just 4.5% for the next 12 months, according to Veros Real Estate Solutions’ Q2 2022 VeroFORECAST.

This is a drop by almost half from the 7.1% appreciation forecast just one quarter ago and is attributed to rising mortgage rates and hesitancy from buyers who are fearing a recession.

VeroFORECAST evaluates home prices in over 300 of the nation’s largest housing markets. 

Inventory Remains Low

If it wasn’t for a very low inventory of homes available for sale in many markets, prices would be falling even more.

“A 4.5% average annual appreciation forecast signifies that the process has begun to return the market to historically more normal times from the overheated post-pandemic market of the previous two years,” according to the Veros report.

Karen Picarello, a Certified Real Estate with RE/MAX Fine Properties in Scottsdale, Ariz., said in a prepared statement, that she is also seeing signs of a slowing, yet healthy, market.

“With higher interest rates, some buyers are no longer looking, which is lessening overall buyer demand,” Picarello said. “Buyers with significant cash or equity are being more selective and no longer making offers on houses that are priced significantly above the last comparable sold price. 

“Fear of a recession and crashes in both the real estate and stock markets are also impacting the buyers’ willingness to purchase at this point. Still, houses priced ‘at market’ in good condition are seeing robust activity with healthy offers and minimal days on market. So, the market is actually in the process of returning to a more normal, healthy market.”