Economists agree that home prices in the United States will bottom out by 2013 with the majority thinking that they will only fall slightly, 0.4% in 2012, according to a new survey.
By the beginning of 2012 they will start rising again, says the June 2012 Zillow Home Price Expectations Survey, compiled from 114 responses by a diverse group of economists, real estate experts and investment and market strategists.
For the first time, the individual economists surveyed were largely in agreement on the trajectory of home prices nationally, signaling that a true bottom may be imminent. The survey is based on the projected path of the S&P/Case-Shiller US National Home Price Index during the coming five years.
However, a majority, some 56%, of respondents also believe that in five years the US home ownership rate will be below 65.4%, the rate recorded in the first quarter of 2012. One in five believe the home ownership rate will be at or below 63%, testing or breaking the 62.95 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 home ownership 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,’ he explained.
Looking further into the future, respondents’ expectations remained relatively consistent with their March 2012 outlook.
The most optimistic predict a 1% increase in 2012, on average, while the most pessimistic predict an average decline of 2%. The June survey results also indicate that most of the panelists expect home prices to increase for the remainder of this year after falling 2% in the first quarter.
While the stronger signals of an imminent market bottom and turn are encouraging, the expected pace of housing recovery over the coming three years is significantly weaker now than it was two years ago.
‘In June 2010, the average cumulative appreciation in US home prices expected by our panel was 10.3% for the years 2012 through 2014. ow, two years later, the average prediction among our experts for the same period is just 3.5%,’ said Terry Loebs, founder of Pulsenomics.