On March 18, the Zillow March 2013 Home Price Expectations Survey (pdf) results were released. This survey is done on a quarterly basis. (please note: as stated in the Press Release, “This is the first survey edition that utilized the U.S. Zillow Home Value Index (ZHVI) as the reference benchmark for the panel’s home price expectations.”)
Various charts from the March 2013 Survey results are presented, including the following:
As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the U.S. Zillow Home Value Index Level, will continually climb.
The detail of the March 2013 Home Price Expectations Survey (pdf) is interesting. Of the 118 survey respondents, 3 (of the displayed responses) forecast a cumulative price decrease through 2017; and of those 3, only 1, John Brynjolfsson, foresees a double-digit percentage cumulative price drop, at 11.04%.
The Median Cumulative Home Price Appreciation for years 2013-2017 is seen as 4.78%, 8.68%, 12.62%, 17.03% and 20.77%, respectively.
For a variety of reasons, I continue to believe that even the most “bearish” of these forecasts (as seen in John Brynjolfsson’s above-referenced forecast) will prove too optimistic in hindsight. Although a 11.04% 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 1549.71 as this post is written