On September 21, 2021, the Zillow Q3 2021 Home Price Expectations Survey results were released. This survey is done on a quarterly basis.
An excerpt from the press release:
Experts surveyed expect home prices nationwide to increase a cumulative 31.8% through 2025, the equivalent of an average annual rate of 5.7% — far below the current annual appreciation of about 17%.
“Across the U.S., home value appreciation rates and annual rent price increases are at historically high levels, and home price expectations are now the highest we’ve recorded in the 12-year history of this survey,” said Terry Loebs, founder of Pulsenomics, the independent research firm that fielded the survey. “The silver lining for aspiring homeowners is that the worst of the housing supply crunch looks to finally be behind us, and most experts believe that the past year’s rapid price boil has begun to simmer down.”
Various Q3 2021 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 Q3 2021 Home Price Expectations Survey is interesting. Of the 111 survey respondents, only 3 (of the displayed responses) forecasts a cumulative price decrease through 2025.
The Median Cumulative Home Price Appreciation for years 2021-2025 is seen as 11.0%, 18.16%, 23.79%, 28.49%, and 33.27%, respectively.
For a variety of reasons, I continue to believe that these forecasts will prove far too optimistic in hindsight.
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. Residential real estate is an exceedingly large asset bubble. As such, from these price levels there exists outsized potential for a price decline of severe magnitude.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 4363.45 as this post is written