2011 seen as ‘turning point’ for home prices

MacroMarkets panelists expect little growth through 2015

More than half of economists, real estate experts and investment strategists polled by MacroMarkets LLC in June said they now expect national home prices to hit a bottom sometime in 2011 and remain stable through 2015.

MacroMarkets polls more than 100 housing experts with a wide range of views, including FusionIQ CEO Barry Ritholtz, Moody’s Analytics economists Mark Zandi and Celia Chen, National Association of Realtors Chief Economist Lawrence Yun, Freddie Mac Chief Economist Frank Nothaft, and Rosen Consulting Group’s Kenneth Rosen.

Panelists are asked to project the path of the Standard & Poor’s/Case-Shiller U.S. National Home Price Index over the coming five years. Robert Shiller is MacroMarkets’ chief economist and co-founder.

"A significant majority of our panelists believe that the bottom for home prices arrived in the first quarter or will arrive sometime before year-end. Despite persistent macroeconomic uncertainty and unprecedented housing market dysfunction, almost two-thirds of the panelists see the U.S. residential real estate market as at an historic turning point," Shiller said in a statement.

The 69 panelists forecasting a 2011 bottom predict less than 2 percent average annual growth in prices through December 2015, he said.

"A 2 percent a year home-price increase will not inspire a lot of consumer confidence. Given prevailing inflation expectations, this forecast implies virtually no change in real home values going forward," Shiller added.

The most optimistic quartile of panelists projected, on average, a 15.3 percent price increase from year-end 2010 through 2015, while the most pessimistic quartile of panelists projected, on average, a 6 percent price drop.

"This spread is huge, representing almost $4 trillion in housing market value," Terry Loebs, MacroMarkets managing director, said in a statement.

"This is a gut-wrenching time for market stakeholders and policymakers, because each of these scenarios is plausible."

On average, panelists predicted a 3.52 percent drop in fourth-quarter 2011 compared to fourth-quarter 2010, followed by small increases every year through fourth-quarter 2015 when prices are expected to rise 3.47 percent on an annual basis.

 

Speakers at last month’s Pacific Coast Builders Conference (PCBC) predicted a housing recovery would remain elusive until 2013 or beyond.


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