A survey conducted by Zillow compiled from 114 responses by a diverse group of economists, real estate experts and market strategists, reveals that economists expect home prices to decline only slightly in 2012 (0.4 percent for the year) and then be on the rise. According to Zillow, this is the first time the individual economists surveyed were largely in agreement on where U.S. home prices are headed, signaling that a true bottom may be imminent.
Homeownership to fall…perhaps hitting new low-
According to the survey, a majority (56 percent) of respondents believe in five years, the U.S. homeownership rate will be below 65.4 percent, the rate recorded in the first quarter of 2012. Twenty-percent of those surveyed are even more glum about the future, predicting that the homeownership rate will be at or below 63 percent, testing or breaking the 62.9 percent rate established in 1965, the lowest on record.
“It’s good to start to see some convergence of expectations among economists, as it lends further support to the claim that a bottom is real,” said Zillow Chief Economist Stan Humphries. “However, the fact that more than half of respondents believe that the homeownership rate will fall lower should be a sobering reminder that significant challenges remain ahead for the housing market, from negative equity to millions of foreclosed homeowners who now have impaired credit, making a return to homeownership harder than it would be otherwise.”
The future looks bright, but not that bright-
While the survey shows economists are agreeing that the housing market “bottom” is imminent the pace of the housing market recovery is expected to be much weaker now than it was two years ago.
“In June 2010, the average cumulative appreciation in U.S. home prices expected by our panel was 10.3 percent for the years 2012 through 2014. Now, two years later, the average prediction among our experts for the same period is just 3.5 percent,” said Terry Loebs, founder of Pulsenomics. “This translates into $1.25 trillion less housing wealth than expected nationally over the coming three years.”
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