Good solid appreciation numbers. That still makes this a very good time to buy a new home before prices climb any higher. What are you waiting for? Let’s get started today!
DATE:AUGUST 8, 2013 | CATEGORY:MARKET TRENDS | AUTHOR:CORY HOPKINS
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More than 100 real estate and economic experts predict home values will end 2013 up 6.7 percent from the end of 2012, as the housing market recovery continues to widen and accelerate, according to the latest Zillow Home Price Expectations Survey. A majority of the panel also said that while rising mortgage rates don’t pose a threat if they stay within the 4 to 5 percent range, they could derail the recovery if they reach 6 percent or higher.
The survey of 106 economists, real estate experts and investment and market strategists was sponsored by leading real estate information marketplace Zillow, Inc. and is conducted quarterly by Pulsenomics LLC. Panelists said they expected median U.S. home values to rise to $167,490 by the end of this year, up from $156,900 at the end of 2012 and $161,100 currently. Based on current expectations for home value appreciation over the next five years, the panelists on average predicted that U.S. home values could approach new record highs by the end of 2017, coming very close to the previous peak level of $194,600 set in May 2007.
The expectations for a 6.7 percent year-over-year increase in home values was up significantly from expectations of a 5.4 percent bump predicted the last time the survey was conducted.
Panelists expect annual home value appreciation rates this year to end on a strong note, before slowing considerably from 2014 through 2017. Panelists said they expected appreciation rates to slow to roughly 4.4 percent in 2014, on average, unchanged from the previous survey. This rate is expected to slow further to 3.6 percent, 3.5 percent and 3.4 percent in 2015, 2016 and 2017, respectively. Cumulatively, survey respondents predicted home values to rise 23.7 percent through 2017, on average, up from 22.3 percent in the last survey.
“Short-term expectations for home value appreciation through the end of this year are consistent with a nationwide housing market recovery that is both strengthening and widening, but still coping with high levels of negative equity, high demand and low inventory. Combined, these factors will continue putting upward pressure on home values for the next few months,” said Zillow Senior Economist Dr. Svenja Gudell. “But the days are numbered for these kinds of market dynamics, as investors begin to pull out of some markets, mortgage interest rates rise and more inventory becomes available. Over the next few years, these trends will help the market stabilize and will bring home value appreciation more in line with historic norms. As long as mortgage interest rates don’t rise too far and too fast, most markets should be able to absorb these changing dynamics while still remaining healthy.”
Panelists were also asked if recent increases in mortgage rates presented a significant threat to the ongoing housing market recovery. Among those expressing an opinion, 88 percent said no. Those panelists who responded “no” or “not sure” were then asked what minimum mortgage interest rate (on a 30-year, fixed-rate mortgage) would pose a significant threat to the housing recovery. Among these respondents, 61 percent said interest rates would have to rise to at least 6 percent to create a significant threat.
For full survey results and graphics, please visit Zillow Real Estate Research or http://www.pulsenomics.com.