On December 18, 2020, the Zillow Q4 2020 Home Price Expectations Survey results were released. This survey is done on a quarterly basis.
Various Q4 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 Q4 2020 Home Price Expectations Survey is interesting. Of the 100+ survey respondents, only one (of the displayed responses) forecasts a cumulative price decrease through 2025, and that forecast is seen as a 9.33% cumulative price decrease through 2025.
The Median Cumulative Home Price Appreciation for years 2020-2025 is seen as 6.4%, 11.28%, 14.84%, 18.63%, 22.81%, and 26.77% 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 have occurred.
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 3700.37 as this post is written