From HW:
San Diego should see home prices rise 3.5% next year, but prices in Florida and Nevada, two states where the foreclosure crisis is especially acute, will drop 6% to 7%, according to a real estate market forecast.
While 40% of major metros are expected to see appreciation in home prices, most of that is expected to be fairly mild.
The forecast comes from Santa Ana, Calif.-based Veros Real Estate Solutions, a technology firm serving the financial services industry.
The forecast looks at the median price tier in metros of 500,000 or more. For December 2010 through December 2011, select markets in the U.S. can expect to witness 2.5% to 3.5% appreciation on home values, including Washington state’s tri-city area.
Projected five strongest markets:
1. San Diego / Carlsbad / San Marcos, Calif. (+3.5%)
2. Kennewick / Richland / Pasco, Wash. (+3.4%)
3. Pittsburgh, Pa. (+2.7%)
4. Fargo, N.D. (+2.6%)
5. Washington, D.C. metro area (+2.5%)
Projected five weakest markets:
1. Reno/Sparks, Nev. (-7.2%)
2. Orlando/Kissimmee, Fla. (-6.5%)
3. Boise City/Nampa, Idaho (-6.4%)
4. Deltona/Daytona Beach/Ormond Beach, Fla. (-6.3%)
5. Port St. Lucie/Fort Pierce, Fla. (-6.3%)
Looking out to the 12 to 24 month horizon, nearly 60% of markets are expected to appreciate,” he says, “So while things aren’t happening rapidly, the forecast indicates they are getting better.”
Veros provides forecasts on the national real estate market with the capacity to segment results by property types, pricing tiers, and by metro area, county or ZIP code. The forecast utilizes more than 50 critical decisioning factors to develop reliable market trend predictions, the company said. It takes into account factors such as unemployment and housing inventory levels, among others.
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Also from HW:
National home prices will not increase from the previous year until the fourth quarter of 2012, according to a panel of economists surveyed by MacroMarkets, a financial technology company.
The survey was compiled from 110 responses in December, and it is based upon the projected path of the Standard & Poor’s/Case-Shiller national home price index over the next five years. According to the survey, home prices in the fourth quarter of 2010 will show a 1.13% drop from a year ago, but will begin to stabilize.
At the end of 2011, prices are expected to remain 0.17% below where they will be at the end of this year. But by the close of 2012, prices will have begun its long journey to recovery, increasing nearly 2% from 2011, according those surveyed. By 2015, prices will be increasing by more than 3.5% from the previous year.
Robert Shiller, who co-founded MacroMarkets and remains its chief economist, said less than 3% of those surveyed expected a negative change in 2015. The 3.7% increase expected in that year would be higher than the average annual rate of increases before the bubble.
MacroMarkets Managing Director Terry Loebs said the survey consistently points to price stability in the intermediate and long-term. However, he stressed that the recovery will be long road.
“Weak market fundamentals persist and continue to gnaw at wealth and confidence in these uncharted, post-bubble waters,” Loebs said.
Shiller’s survey released in May, 2010:
The housing recovery is just around the corner – at least that’s the consensus among a panel of 92 well-known industry economists and analysts.
The Madison, New Jersey-based analytics firm MacroMarkets LLC, founded by Robert Shiller, real estate sage and father of the closely-watched Case-Shiller Home Price Index, polled the group of housing market experts and strategists from the likes of Alliance Bernstein, Columbia Business School, Deutsche Bank, Moody’s Analytics, and the GSEs.
Based on their responses, the onset of price recovery in U.S. single family real estate is widely expected by 2011.
Between 2010 and 2014, the panelists forecast a rise in home prices of more than 12 percent.
“The survey results are important because they represent a consensus view among experts with rich and diverse knowledge,” Shiller said. “In the May survey they see only the slightest hint of a downdraft in home prices this year, and after that a respectable uptrend in prices, well ahead of the likely inflation rate.”
But Shiller added, “However, there were a number of panelists more or less sanguine than average, some significantly so, and this reflects continuing volatility and risk in the U.S. housing market.”
The views of those questioned by MacroMarkets didn’t all align. Joe LaVorgna, the chief economist at Deutsche Bank, pegs home prices to rise 37 percent over the next four years.
At the low end of the scale, both Gary Shilling, president of A. Gary Shilling & Co., and Anthony Sanders, professor of real estate finance at George Mason University, expect prices to have fallen by 18 percent by the end of 2014.
“The expectations within this first survey were provided following the end of the homebuyer tax credit and of the Federal Reserve’s $1.25 trillion mortgage-backed securities purchase program,” Shiller said. “It will be interesting to see how panelist views evolve in future months.”
Call me a dull bulb, and perhaps I’m just not interpreting all these forecasts correctly, but my takeaway from all these forecasts is that no one really knows what the heck the real estate market is going to do. When I read or hear competing predictions like these in my field (healthcare IT), I then look to what are the motivators and what does the ‘expert’ stand to gain.
What impact do you think the expiring of the mortage interest deduction will have on home prices? From my understanding, you can still get it if you itemize your deductions, but am not an expert on taxes by any means (just ask the IRS!). Anyone got an explanation of what this could mean to home prices?
http://www.huffingtonpost.com/2010/12/22/huffpost-hill-who-are-you_n_800517.html
No impact on home prices, M.I.D. is still in play. The article is misleading.
no one really knows what the heck the real estate market is going to do.
Agreed.
I think next year look a lot like 2010 did, barring any unforeseen game changers, and they would need to be doozies.
If any of the TBTF banks go under, the GovFED will keep throwing money at them.
MERS? A “technicality” that settlements will fix.
Revolution? Naw, it ain’t bad enough.
From the SD Business Journal:
http://www.sdbj.com/news/2010/dec/22/report-home-prices-set-rise-over-next-12-months/
My crystal ball says 2011 will see pricing hold at the low end and maybe even gain. Continued drops in the mid and high end for non-premium properties and locations. Premium properties and locations hold and maybe raise a bit as competition heats up.
I see TPTB doing whatever it takes to prevent any further large drops in asset pricing, although there won’t be much they can do about corrections when it comes to non-premium properties.
Most of the “experts” missed the housing bubble in a big way. Why should I believe them now?
This article and data is very misleading. Anyone notice the extrapolated trend line for the mean is only based on 1987-1999 as if our housing history only included 12 years. I’ve seen this exact same graph including dates much farther back and it shows our current price 10% higher than the actual mean.
Ever since my wife started her Phd in economics, I’ve been very alert to BS statistics.
Delmar renter,
You are 100% correct regarding statistics. As an economist myself I can tell you numbers can be manipulated to show whatever you’re trying to prove. Because of this people tend to group together with others that share their point of view.
Regarding the article it’s bought and paid for from start to finish to show house prices will go up.
A candidate “game changer” next year could very well be the bond market.
The recent increase in mortgage rates may just be a preview of what is to come. And I have no idea how the municipality bond market is going to be kept from exploding, either. Just look at the city of San Diego and California budgets, let alone the federal budget and other municipalities.
But perhaps the Fed will be able to keep up its gravity defying tricks….
I thought the “extrapolated” trend line was pretty funny as well. It would be parabolic if you followed it out far enough.
Lies, damn lies, and statistics.
The game will change once the banks no longer own houses. Until then, ssdd.
Real estate prices will rise in the next 2 years.
WHY?
Because the dollars to pay the higher prices have already been printed this year and last year!
Foreclosure Fiasco: Welcome to Zombieland: Ladera Ranch, California
By Pat Regnier, assistant managing editor
December 7, 2010: 4:10 PM ET
ORANGE COUNTY, Calif. (MONEY Magazine) — Joshua and Irene Vecchione are cleaning the dinner dishes one evening in October when Joshua’s cellphone rings. It’s Rhea from the Chase collections department, and she wants to know if he has $123,000 today. That’s what it will take to get the Vecchiones current on their mortgage.
Rhea is a new caller, but Joshua has been talking with Chase reps a lot since February 2009, when he and Irene stopped making the $8,000 monthly payment on their five-bedroom spread in Ladera Ranch, Calif., an upscale development in south Orange County.
After a few months, they were allowed into a trial mortgage-modification program, which let them pay less than half as much and kept Joshua on the phone as Chase requested more and more documents.
In July, though, the bank decided the couple didn’t merit a permanent “mod.” The Vecchiones, who own the toy store in Ladera, began negotiating with Chase to do a short sale, in which the lender allows the debtor to sell for less than what’s owed and walk away. So what Rhea says troubles Joshua: They’re still listed in Chase’s system as an active foreclosure.
“How am I in foreclosure?” he asks after hanging up. “I’m not in foreclosure.”
http://money.cnn.com/2010/12/07/real_estate/ladera_ranch_foreclosure.moneymag/index.htm
Re: I thought the “extrapolated” trend line was pretty funny as well. It would be parabolic if you followed it out far enough.
Actually, I was guessing the extrapolated trend line was showing a fixed percent increase per time period. In other words, exponential. If the exponential assumption is true, It would be a straight line (with no curvature) trending upward if the Y axis were on a log scale, as is often done with 10 yr. stock price plots.
Non-linear extrapolation ftw!
Inflation for gas, food etc. Deflation for housing. 2011 will look more like 2008 with increasing REO inventory and banks slashing prices to liquidate them. Also the Fed, with QE2,QE3 etc. watches in dismay as interest rates continue rise, not good for housing.
This reminds me of the way people bought into tech in 2003. Everyone still had memories of how much money they made in the 90’s and they jumped right back in. That resulted in one brief run up that quickly fell to half it’s level. Today, Intel, Microsoft, Cisco, etc are all still at ~1/3 their highs.
I am also reminded Gerald Ford’s campaign to “Whip Inflation Now.” He handed out buttons with WIN on them. People turned them over to say NIM – No Immediate Miracles.
My crystal ball says not to trust crystal balls.
Prices are going up, unless they aren’t.
Weak fundamentals are a real problem in the long run, since there has to be income to service the mortgage debt that goes along with housing prices. The income to house price ratio is still out of whack in many places.
people have to live somewhere is my prediction.
I predict prices will fall dramatically everywhere… except North County San Diego! 😉
Re: #15 and #16, I guess my point didn’t come across. An exponential trend grows a little more slowly than a parabolic trend, and is exactly the same growth rate you expect on a fixed interest CD or savings account. So, it’s reasonable as a baseline for forecasting, unless you take the position that real estate is not an investment and is more like a durable good such as a car or large appliance. I’m not an economist, so I don’t know of the top of my head what a forecast for durable goods prices is expected to look like.
I got your point, and I agree with you except where you say it’s a reasonable baseline for forecasting. What I’m getting at is that extrapolation is iffy at best, and exponentially (heh) more so when you start extrapolating a curve.
I know my maths.
http://www.youtube.com/watch?v=Pj2NOTanzWI