Economists See 10% Home-Price Gain by 2016

I'm trying real hard to keep a long-term perspective when it comes to statistical real estate trends. So my pledge to ignore short-term moves — read it here — was tested when the folks at Zillow releases their periodic survey of economists across the nation to see their outlook for housing values.

I found some interesting data within a Zillow report entitled "Economists Temper Housing Recovery Expectations" where these real estate trackers chose to look at a three-month dip in economists' housing expectations. Zillow's poll of 104 economists found these projected house gains vs. what was the concensus projection in the same survey methodology back in December:

•2012 — March projected drop of 0.72% vs. decline of 0.18% seen three months ago.


•2013 — Now see 1.39% gain vs. 1.75% three months ago.


•2014 — Now up 2.55% vs. 2.71% three months ago.


•2015 — Now up 3.18% vs. 3.23% three months ago.


•2016 — Up 3.32%, same as three months ago.

Zillow Chief Economist Stan Humphries: "The fourth quarter drop in the national Case-Shiller Index was sharper than some expected and is the likely reason so many of the economists in the survey revised their forecasts downward … Looking at the longer history of these forecasts by top economists, the bottom in home prices always seems just around the corner but never quite here. Conditions across the country vary considerably. Some markets have already hit bottom and are experiencing tight inventory and multiple offers, while foreclosures and negative equity continue to pull down the housing market in many other parts of the country."

OK, Zillow chose to note the economists' modestly declining hopes for this year's pricing. I decided to look longer term … and saw these same economists projecting a total 5-year gain of 10 percent.

Few will get rich off real estate if home prices only gain 10 percent in five years. But when I ponder that price gain — vs. a long history of pricing from the S&P/Case-Shiller indices — I found the last time the S&P 10-city composite was gaining 10 percent over a five year period was June 2007. So, in relative terms, Zillow's flock of prognosticators are comparatively upbeat.

Also, one must look at the economist panel's projected 10 percent gain through 2016 in other historical perspectices:

•It would still leave the S&P 10-city inde 27 percent below its 2006 peak.


•It's 1.9 percent annual growth rate is roughly half the 3.5 percent annualized gain in the U.S. 10-city indexes enjoyed from 1987 through 2011.


•And, short-term speaking, 10 percent projected gain is down from 11 percent forecast in December.

Bottom line: Short term, no progress. Long term, meager gains.

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