Industry NewsOpinion

Why housing forecasts are (almost) worthless

Perspective: Too many variables make future unpredictable
Published on May 25, 2006

Forecasters, prognosticators, pundits, analysts and others of their ilk are able to predict the future -- or so they would have real estate professionals and the home-buying and home-selling public believe. It's bunk, of course. A look back at housing market forecasts over the last five or six years makes the point. Forecasters consistently under-estimated the strength of the housing boom and predicted year after year that the housing markets were headed into a period of fewer sales. That prediction may be realized this year, yet any forecast can come true eventually if the time horizon is long enough, particularly when a market is known to have been cyclical in the past. It's difficult to assess the accuracy of housing market forecasts in hindsight because they tend to be presented as moving targets that are adjusted month after month in a determined effort to get closer to the right number before the year ends. Rolling forecasts and annualized sales figures obscure the ex...

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