Most Economists Agree Home Prices Will Bottom by 2013, But Majority Surveyed Expect Homeownership Rate To Dip Further

Posted by: Stan Humphries    Tags:      Posted date:  June 24, 2012  

The June 2012 Zillow Home Price Expectations Survey reveals that economists agree that home prices will decline only slightly in 2012 and expect to see a bottom in home prices by 2013. This is 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, compiled from 114 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 0.4% in 2012, which is more optimistic than their previous expectation of a 0.7% decline recorded in the March 2011 survey. Looking further into the future, respondents’ expectations remained relatively consistent with their March 2012 outlook. The full comparison of the two surveys can be seen in the chart below.

Those surveyed, however, have a different view toward the trajectory of the U.S. homeownership rate, with a majority (56%) of respondents expecting that rate to be below 65.4% within the next five year. One in five believe the homeownership rate will be at or below 63%, testing or breaking the 62.9% rate established in 1965, the lowest on record.

The experts 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 18.5% over the next five years), while the most pessimistic predict an average decline of 2% this year (rising only 1.6% over the five years). Of the individual panelists, the most bullish, were James Smith (Parsec Financial Management) and Allen Sinai (Decision Economics) who both expect home prices to increase more than 3% this year, while the most pessimistic were Gary Shilling (A. Gary Shilling & Co.) and Barry Ritholtz (FusionIQ) who expect home prices to decrease more than 4% in 2012.

This is the 14th edition of the Home Price Expectations Survey, and it was conducted from May 31-June 14, 2012 by Pulsenomics LLC on behalf of Zillow, Inc. Additional details regarding the survey are available at

About the author
Stan Humphries
Stan is Zillow's Chief Economist. To learn more about Stan, click here