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Where Are House Prices Headed?

We are often asked where we think home prices are headed over the next year. Recently, several groups have stepped forward and given their projections as to what level of appreciation we can expect by the end of 2013. Here is what they said:

  • Demand Institute Study: 1.75% appreciation
  • Urban Land Institute: 2%
  • Home Price Expectation Survey: 2.44%
  • National Assoc of Business Economists: 2.8%
  • Wall Street Journal’s Survey of Economists: 3.25%

All five groups are calling for home values to rise through the end of next year. However, none are projecting that we will hit historic annual appreciation levels (3.6%) that existed prior to the housing bubble.

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2 replies
  1. Gregg
    Gregg says:

    I think the Wall street is off the mark, while I agree that the market will improve it will be a marathon not sprint to recovery, my money is on the tourtice vs the hare., While units sold may of increased the most important part of the housing equation value ($$$$) and regaining that equity lost over the last 5 years could take more that time period to recover that.

    Reply
  2. Robert Katula
    Robert Katula says:

    Rising home values is largely viewed as an indicator that housing is finally on the rebound. I take the opposite view. One median family income is still declining and far out pacing home depreciation. I feel that the income risk layer is the most important of all. Even at thirty-three percent of verifiable gross income, the risk is too high. If homes begin to slowly appreciate again, it will only make homes less affordable for most Americans. Second, the banking industry does not have in place a system to follow up with borrowers post origination. The culture is geared toward procuring the next loan and the next one after that one. Turning the keys over and saying you are on your own is short sighted at the very least. Finally, a false housing recovery will be far more disastrous than the original crisis. The goal should be to create a sustainable housing market rather than one that sees temporary, short term improvement. Focusing on home values misses the big picture that we all must view with great attention.

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