On June 24, the Zillow June 2012 Home Price Expectations Survey results were released. This survey is done on a quarterly basis.
An accompanying image is seen below: (click on chart image to enlarge)
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 slowly climb after 2012.
The detail of the June 2012 Home Price Expectations Survey (pdf) is interesting. Of the 114 survey respondents, 8 (of the displayed responses) forecast a cumulative price decrease through 2016; and of those 8, only 1 (Gary Shilling) foresees a double-digit percentage cumulative price drop, at 16.98%.
The Median Cumulative Home Price Appreciation for years 2012-2016 is seen as -.50%, .87%, 3.52%, 6.61%, and 10.34%, 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 16.98% 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 1313.72 as this post is written