On March 19, 2020, the Zillow Q1 2020 Home Price Expectations Survey results were released. This survey is done on a quarterly basis.
Various Q1 2020 Zillow Home Price Expectations Survey charts are available, including that seen below:
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, will continually climb.
The detail of the Q1 2020 Home Price Expectations Survey is interesting. Of the 100+ survey respondents, only three (of the displayed responses) forecasts a cumulative price decrease through 2024, and none of those forecasts is for a double-digit percentage decline. The largest decline is seen as a 6.99% cumulative price decrease through 2024.
The Median Cumulative Home Price Appreciation for years 2020-2024 is seen as 3.50%, 6.60%, 9.70%, 12.66%, and 16.38% respectively.
For a variety of reasons, I continue to believe that even the most “bearish” of these forecasts (as seen in the above-referenced forecast) will prove far too optimistic in hindsight. From a longer-term historical perspective, such a decline is very mild 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, 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 2402.67 as this post is written