Home prices will see steady increases through 2016 starting this year, according to a quarterly survey of more than 100 economists, real estate experts and investment strategists.

The survey, conducted by research and consulting firm Pulsenomics LLC on behalf of real estate search and valuation portal Zillow between Aug. 30-Sept. 14, 2012, asked 113 participants to project the path of the S&P/Case-Shiller U.S. National Home Price Index over the next five years.

The latest S&P/Case-Shiller Home Price Indices, which include data through June, show national home prices up 1.2 percent from a year ago during the second quarter. All of the markets in the S&P/Case-Shiller 20-city composite posted annual gains for the second month in a row, and all but two — Charlotte and Dallas — posted better annual returns in June compared to May.

This quarter’s survey results show optimism has increased among the participants, who in the second quarter had predicted a 0.4 percent dip in home prices this year, followed by modest increases starting in 2013 and through 2016.

Economists now forecast home prices will rise 2.3 percent in 2012 from fourth-quarter 2011, and see further cumulative rises of 4.7 percent in 2013, 8 percent in 2014, 11.4 percent in 2015, and 15.2 percent in 2016.

Source: Pulsenomics LLC  

That’s an expected annual growth rate of 2.9 percent between 2012 and 2016, slightly under the 3.6 percent annual growth rate experienced in the prebubble years between 1987 and 1999.

The most pessimistic quartile of survey respondents expect home prices to rise 0.3 percent this year; the most optimistic, 4.4 percent. 

"This is further evidence that we’re seeing a true recovery in the housing market," said Stan Humphries, Zillow’s chief economist, in a statement.

"Not since mid-2010 — in the midst of the homebuyer tax credits — have we seen this group so bullish on housing. It’s refreshing to see this optimism at a time when the market seems to be making an organic recovery, in the absence of an artificial stimulant like the tax credits."

Source: Pulsenomics LLC 

The survey also revealed that, of the 94 respondents who expressed an opinion, 60 percent favored getting rid of the mortgage interest tax deduction, with 10 percent saying it should be eliminated immediately and 50 percent saying it should be phased out gradually. Thirty percent of respondents said the deduction should remain, but that there should be more restrictions on eligibility. Only 11 percent said the deduction should remain as is.

Source: Pulsenomics LLC  

Some Congress members have proposed eliminating or changing the mortgage interest deduction as one way to help address the nation’s $15 trillion debt.

"Although the mortgage interest deduction remains enormously popular with existing and aspiring homeowners, it costs the federal government about $90 billion a year," said Terry Loebs, founder of Pulsenomics, in a statement. 

"Time will tell whether the unprecedented fiscal challenges facing the U.S. coupled with a housing market now on the mend will embolden more policymakers to touch this lightning rod."

Respondents also weighed in on how the policies of the two presidential candidates might affect the housing recovery. Just over half of respondents, 52 percent, indicated they were planning to vote for Gov. Mitt Romney or were undecided but leaning in favor of Romney. Just under half, 47 percent, indicated they would vote for President Barack Obama, or were undecided but leaning in favor of Obama.

When asked which candidate they thought would promote more significant housing policy changes, 47 percent said Obama, while 21 percent said Romney. Nearly a third of the respondents, 32 percent, said there would be "no material difference" in the housing policy changes proposed by either candidate.

When asked whether those policy changes would help or impair the housing recovery, an equal share of respondents — 17 percent each — said Obama and Romney’s policies would likely help. Nevertheless, a quarter said Obama’s policies would likely impair the recovery, while only 4 percent said Romney’s policies likely would. Ten percent said Romney’s policies would likely have "no meaningful effect" compared with 27 percent who said Obama’s policies would likely have no meaningful effect.

Some local governments, including the city of Chicago and California’s San Bernardino County, have proposed the controversial idea of using eminent domain to seize current, underwater mortgages and use principal reductions to eliminate their negative equity while promising mortgage investors "fair value" compensation for the loans. The overwhelming majority of survey respondents, 91 percent, opposed the idea.

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