On September 20, the Zillow September 2012 Home Price Expectations Survey (pdf) results were released. This survey is done on a quarterly basis.
An image from the brief on the September 2012 Survey, displaying survey responses by quartile, is seen below:
(click on chart image to enlarge)
Other charts are also seen in the brief.
As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the Case-Shiller US National Home Price Index (NSA), will continually climb after 2012.
The detail of the September 2012 Home Price Expectations Survey (pdf) is interesting. Of the 113 survey respondents, 5 (of the displayed responses) forecast a cumulative price decrease through 2016; and of those 5, only 1 (Gary Shilling) foresees a double-digit percentage cumulative price drop, at 15.21%.
The Median Cumulative Home Price Appreciation for years 2012-2016 is seen as 2.0%, 4.86%, 8.21%, 11.57%, and 15.86%, respectively.
For a variety of reasons, I continue to believe that even the most “bearish” of these forecasts (as seen in Gary Shilling’s above-referenced forecast) will prove too optimistic in hindsight. Although a 15.21% cumulative decline is substantial, from a longer-term historical perspective such a decline is rather tame in light of the wild excesses that occurred over the “bubble” years.
I have written extensively about the residential real estate situation. For a variety of reasons, it is exceedingly complex. While many people continue to have an optimistic view regarding future residential real estate prices, in my opinion such a view is unsupported on an “all things considered” basis. Furthermore, (even) from these price levels there exists outsized potential for a price decline of severe magnitude, unfortunately. I discussed this downside, based upon historical price activity, in the October 24, 2010 post titled “What’s Ahead For The Housing Market – A Look At The Charts.”
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1460.15 as this post is written