• More than 100 experts predict U.S. home values to end 2014 up an average of 4.8 percent from 2013, to a median home value of $176,760.
• Almost 90 percent of respondents with an opinion expect the housing market to fully normalize within five years.
• In the longer term, panelists are most concerned by would-be first-time buyers in a weak financial position and demographic changes affecting the housing market.

Home values will end 2014 up 4.8 percent year-over-year, and will gain another 23.5 percent in value, cumulatively, through 2019, according to results of the latest Zillow Home Price Expectations Survey.

The survey of economists, real estate experts, and investment and market strategists asked panelists to predict the path of the U.S. Zillow Home Value Index into 2019, and solicited opinions on what is holding back the housing market recovery and when it is expected to normalize[i]. The survey was sponsored by leading real estate information marketplace Zillow, Inc. and is conducted quarterly by Pulsenomics LLC.

The panelists said they expect home values to appreciate between 3 and 4 percent annually over the next five years, on average, slowing to an annual rate of 3.2 percent in 2019. Nationally, the median home value is currently $176,500, according to the 2014 Q3 Zillow Real Estate Markets Report, and is projected to cross the $200,000 threshold in September 2018. Home values are expected to rise above their 2007 peak of $196,400 in February 2018.

2014 Q4 Special Report: Impediments to a Uniform, Sustainable U.S. Housing Recovery

Panelists were asked to identify the factor that they considered to be “the single most significant threat to the stability of the U.S. housing market in the longer-run (5 or more years from now).” Panelists most frequent responses were: weak financial capacity among would-be first-time homebuyers (28 percent of panelists); and shifting demographics (27 percent of panelists). A low household formation rate, chosen by 14 percent of panelists, was also listed as a factor that would have a significant impact on the recovery. A majority of panelists did not consider mortgage rate lock-in to be a significant impediment for the housing market.

The second question in the special report touched on the amount of time panelists expect it will take for conditions in the U.S. housing market to normalize. Of those with an opinion, 30 percent of panelists said they expect the market to stabilize one to two years from now, and 40 percent said it will take 3-5 years. Almost 20 percent said they believe the market has already has returned to normal, or will return to normal in the next 12 months.

[i] This edition of the Home Price Expectations Survey was conducted from Oct. 20, 2014 through Nov. 3, 2014 by Pulsenomics LLC on behalf of Zillow, Inc.