Zillow has been accurately predicting the changes in the Case-Shiller Index lately, swamping the boat like most everything else they touch in the industry. The C-S Index is becoming an after-thought for those thirsty for price data.
While the San Diego CSI has been showing a YoY double-digit gain for the last 15 months (including March’s 18.9% and April’s 15.3%), those days are rapidly coming to an end.
Zillow is predicting that their San Diego ZHVI index will show a 12.7% YoY change for May:
It was the rise in mortgage rates about a year ago that helped slow the frenzy conditions, and cause prices to level off. The YoY changes will be catching up, and by the end of summer be back in the single digits – we could even get close to zero.
Yesterday, Professor Shiller hoped that people wouldn’t get too worked up about prices, and I doubt they will. Buyers especially will be happy to tread water as long as prices and rates are both stagnant – which makes it tougher on sellers to sell for their price.
For sellers waiting for the market to top off, I think you can say we are here. Yes, there will be slight appreciation here and there, but you could also get a couple of bad comps around you too.
I think everyone should be happy if things go flat for awhile. For sellers, they regained most of the equity they thought they had 7 years ago and don’t need to keep holding on while they think prices are rising to the moon. Once the feeling is digested that the price rebound has stabilized, people will feel better about selling and not fear losing out on easy money or being unable to buy a replacement house. For Buyers they might not have to suffer through bidding wars and new listings that are all priced at last comp plus 10% and can actually shop for a house they like as opposed to a house they can ‘get’. For agents, a more predictable market means steady flow of deals. Win win win.