A report from Arch Mortgage Insurance (Arch MI) shows that the ‘energy patch’ states – such as North Dakota, Wyoming, Alaska, West Virginia and New Mexico – are currently at the highest risk of seeing home prices depreciate over the next two years, as they are likely to be affected by the recent drop in prices for coal, oil and natural gas.
‘Nationwide, the housing market is likely to strengthen over the coming year in spite of economic headwinds from a strong dollar and expected gradual rate increases by the Federal Reserve,’ says Ralph G. DeFranco, senior director of risk analytics and pricing at Arch MI, in reference to Arch MI's Risk Index report. ‘Despite this forecast, 'energy patch' states such as North Dakota, Wyoming, West Virginia and Alaska are at greatest risk of experiencing declining prices as their economies continue to slow due to continued fallout from the large drop in coal, oil and natural gas prices seen over the last year.’
DeFranco adds that metropolitan areas in Texas are the most at risk to see home prices drop over the next two years due to oil price declines.
Despite the high risk of home price depreciation in the energy patch states, home prices nationally are expected to increase over the next two years – albeit at a much slower rate.
‘Apart from these few exceptions, national prices should rise faster than inflation over the coming years due to a number of strong fundamentals, including: a shortage of homes for sale or rent, better than average affordability, and continued job growth of two million to three million jobs a year,’ DeFranco says.
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