Zillow Q3 2013 Home Price Expectations Survey – Summary & Comments

On August 8, the Zillow Q3 2013 Home Price Expectations Survey (pdf) results were released.  This survey is done on a quarterly basis.

An excerpt from the Press Release:

The survey of 106 economists, real estate experts and investment and market strategists was sponsored by leading real estate information marketplace Zillow, Inc. (NASDAQ: Z) and is conducted quarterly by Pulsenomics LLC. Panelists said they expected median U.S. home values to rise to $167,490 by the end of this year, up from $156,900 at the end of 2012 and $161,100 currently. Based on current expectations for home value appreciation over the next five years, the panelists on average predicted that U.S. home values could approach new record highs by the end of 2017, coming very close to the previous peak level of $194,600 set in May 2007.

Various charts from the Q3 2013 Survey results are presented, including the following:

(click on image to enlarge chart)

Zillow 8-8-13 - Q32013_ZHPES_Chart


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 Q3 2013 Home Price Expectations Survey (pdf) is interesting.  Of the 106 survey respondents, only four (of the displayed responses) forecast a cumulative price decrease through 2017; and of those four, none foresee a double-digit percentage cumulative price drop.  The most “bearish” of these forecasts is that of Mark Hanson’s prediction of a 3.05% cumulative price decrease through 2017.

The Median Cumulative Home Price Appreciation for years 2013-2017 is seen as 6.00%, 11.30%, 15.02%, 19.14% and 22.91%, respectively.

For a variety of reasons, I continue to believe that even the most “bearish” of these forecasts (as seen in Mark Hanson’s above-referenced forecast)  will prove too optimistic in hindsight.  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 1691.42 as this post is written