On June 22 MacroMarkets released its June 2011 Home Price Expectations Survey (pdf) results. This Survey is now done on a quarterly basis.
The accompanying chart is seen below:
(click on chart image to enlarge)
As one can see from the above chart, the average 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 (pdf) is interesting. Of the 100+ survey respondents, 18 (of the displayed responses) foresee a cumulative price decrease through 2015; and of those 18, only three, Gary Shilling, John Brynjolfsson, and Anthony Sanders foresee a double-digit percentage cumulative price drop. Gary Shilling 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 2011-2015 is seen as -3.10%, -2.22%, -.15%, 2.94%, and 6.72% 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 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 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.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1292.89 as this post is written