On December 22 MacroMarkets released its December Home Price Expectations Survey results.
Here is the Press Release (pdf); the accompanying chart is seen below:
(click on chart image to enlarge)
As one can see from the above chart, the expectation is that not only has the residential real estate market (nearly) hit a “bottom” as far as pricing; but that steady yet mild appreciation will occur through 2015.
The survey detail is interesting. Of the 110 survey respondents, only 7 foresee a cumulative price decrease through 2015; and of those 7, only one, Gary Shilling, sees a double-digit percentage cumulative price drop. He remains the most “bearish” of the survey participants with a forecast of a 19.68% cumulative price decline through 2015.
The Median Cumulative Home Price Appreciation for years 2010-2015 is seen as -1.0%, -.4%, 1.94%, 4.6% , 7.86%, and 11.69% respectively.
For a variety of reasons, I continue to believe that even the most “bearish” of forecasts (seen in Gary Shilling’s above-referenced forecast) will prove too optimistic in hindsight. Although a 19.68% 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 at this time many people 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, 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.
A Special Note concerning our economic situation is found here
SPX at 1257.64 as this post is written