In most parts of the country, home prices are appreciating, albeit at a slower pace than before. But in 5% of metros, prices will depreciate up to 1.9% in the coming year.
An analysis of 349 metropolitan statistical areas by Veros Real Estate Solutions reveals the bottom 10 MSAs, or those with home prices that depreciate the most in the next 12 months.
And what we found was that half of those MSAs were located in one state: Louisiana.
With five of its nine MSAs in the bottom 10 this quarter, Louisiana effectively has a statewide concern, although the larger coastal markets of Lake Charles, Houma-Thibodaux and New Orleans-Metairie are not projected to depreciate.
A report published by LSU’s Economics & Policy Research Group reveals that the recession did not end in that state until late 2017 and that it cost the state more than 23,000 jobs.
The job growth on the horizon has been slower to reach Louisiana, and that is contributing to the forecasted depreciation in real estate values. The recession was slower to hit Louisiana employment than either Texas or the nation. Now, recovery is proving to be equally slow.
In 2010, according to the Bureau of Labor Statistics, the state's unemployment rate was 7.7% – lower than the nation and Texas, which were 9.9% and 8.3%, respectively. In March 2019, Louisiana unemployment was 4.7%, while both Texas and the country had dropped to 3.8%.
The “Bottom 10” MSAs – those with the highest projected depreciation – include five in Louisiana, two in both Illinois and Connecticut, and a 10th in Arkansas.
Here are those Bottom 10 markets:
- Alexandria, LA……………………………………………………………….. -1.9%
- Hammond, LA………………………………………………………………… -1.2%
- Danville, IL…………………………………………………………………….. -1.1%
- Baton Rouge, LA…………………………………………………………….. -0.8%
- Lafayette, LA………………………………………………………………….. -0.7%
- Shreveport-Bossier City, LA……………………………………………. -0.7%
- Decatur, IL…………………………………………………………………….. -0.4%
- Hartford-West Hartford-East Hartford, CT………………………….. -0.3%
- Norwich-New London, CT………………………………………………. -0.3%
- Hot Springs, AR……………………………………………………………… -0.2%
According to our VeroFORECAST report, softening throughout the overall U.S. housing market will continue at least to Spring 2020, with the predicted average appreciation rate for the 100 most-populous markets in the report down a fraction from the previous quarter – falling from 3.9% to 3.7%.
While that overall projected appreciation rate is down slightly, the average depreciation rate of the bottom 10 is slightly better. Moving up from -0.92% to -0.76%.
The three states that make up nine of this quarter's bottom 10 – Louisiana, Illinois and Connecticut – have been regular contributors to the projected depreciation cellar.
Illinois and Connecticut have routinely had markets in the bottom 10 and are both projected to do uniformly poorly statewide.
Hartford, Connecticut, with an estimated 2018 population of 1.2 million, now returns to the bottom 10 for the first time since second quarter 2018. It is the exception to the trend of small-to-modest-sized markets making up both the top and bottom 10 lists.
