On January 11, 2022, the Zillow Q4 2021 Home Price Expectations Survey results were released. This survey is done on a quarterly basis.
An excerpt from the press release:
Although every respondent in this latest survey expects nationwide home price appreciation to slow in 2022 from last year’s record-breaking pace, the average of their long-term projections remains among the most bullish outlooks for home values in ZHPES history. On average, panelists expect home values to grow another 6.6% this year, and by 23.5% over the coming five years.
“Although a handful of experts foresee a modest price correction on the horizon, none expect a crash, even as the confluence of unusual forces impacting U.S. housing markets continues to generate significant uncertainty,” said Pulsenomics founder Terry Loebs.Loebs said the range of home price predictions from panel participants is the widest he’s ever seen. The most optimistic group of experts expects more than 37% cumulative home value appreciation through 2026, while the most pessimistic group expects a gain of less than 8% over the same period.
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Various Q4 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 Q4 2021 Home Price Expectations Survey is interesting. Of the 106 survey respondents, none (of the displayed responses) forecasts a cumulative price decrease through 2026.
The Median Cumulative Home Price Appreciation for years 2021-2026 is seen as 17.0%, 25.08%, 30.05%, 34.15%, 39.89%, and 45.08%, 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.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 4681.58 as this post is written