On Thursday, Zillow released its quarterly Home Price Expectations Survey showing forecasters expect the website’s Home Value Index to end 2013 with prices up 6.7%. The numbers surveyed from 106 real estate experts across the country (I am a panel member), showed a significant jump from the 5.4% reported by the survey last quarter.
While price appreciation looks like it will show continuing strength through the end of the year, panelists mostly agreed that the sharp rise in prices we have seen over the last 12-18 months will begin a slower pace through 2017.
“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.”
Panelist were also asked if a recent rise in mortgage rates, almost 100 basis points in the last 3 months, posed a serious threat to the recovery. A whopping 88% said no, and of those more than 60% said rates would need to hit 6% (currently around 4.5%) to reverse the bullish trend.
