Home Price Bottom Always Just Around The Corner But Never Quite Here

The March 2012 Zillow Home Price Expectations Survey reveals that economists continue to temper their expectations about a recovery in home prices. The survey, compiled from 104 responses by a diverse group of economists, real estate experts, and investment and market strategists, records expectations about the projected path of the S&P/Case-Shiller U.S. National Home Price Index over the next five years.

Economists expect home prices to fall 0.7% in 2012, which is more negative than their previous expectation of a 0.2% decline recorded in the December 2011 survey. Most see positive home price appreciation in 2013, although the rate of expected appreciation is more muted now (1.39% annual change) than previously (1.75%). The full comparison of the two surveys can be seen in the chart below.

The economists surveyed varied widely in their expectations for 2012. The most optimistic quartile of panelists predict a 1% increase, on average, in home prices during 2012 (rising by more than 19% over the next five years), while the most pessimistic predict an average decline of 2.8% this year (rising only 0.6% over the five years). Of the individual economists, the most bullish, were Susan Sterne (Economic Analysis Associates), James Smith (Parsec Financial Management), and Allen Sinai (Decision Economics) who all expect home prices to increase more than 3% this year, while the most pessimistic were Gary Shilling (A. Gary Shilling & Co.), Brad Hunter (Metrostudy), and Patrick O’Keefe (J.H. Cohn, LLP) who all expect home prices to decrease more than 4% in 2012.

This is the 13th edition of the Home Price Expectations Survey, and it was conducted from March 1-14, 2012 by Pulsenomics LLC on behalf of Zillow, Inc. Additional details regarding the survey are available at www.pulsenomics.com.

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