Tuesday, September 28, 2010

MacroMarkets September 2010 Home Price Expectations Survey

On September 21 MacroMarkets released its September Home Price Expectations Survey results.

Here is the Press Release (pdf); the accompanying chart (click on chart to enlarge image) is seen below:



As one can see from the above chart, the expectation is that not only has the residential real estate market hit a “bottom” as far as pricing; but that steady yet mild appreciation will occur through 2014.

The survey detail is interesting.  Gary Shilling remains the most “bearish” of the survey participants with a forecast of an 18.78% cumulative price decline through 2014.

The Median Cumulative Home Price Appreciation for years 2010-2014 is seen as -.17%, -.85%, 3.17%, 6.10% , and 9.7%, respectively.

For a variety of reasons, I continue to believe that even the most "bearish” of forecasts (seen in Gary Shilling's above-referenced forecast)  will prove too optimistic in hindsight.  Although an 18% decline is substantial, from a longer-term historical perspective such a decline is rather tame in light of the wild excesses that occurred over the "bubble" years.

I have written extensively about the residential real estate situation.  For a variety of reasons, it is exceedingly complex.  While at this time many people have an optimistic view regarding future residential real estate prices, in my opinion such a view is unsupported on an “all things considered” basis.  Furthermore, there exists outsized potential for a price decline of severe magnitude, unfortunately.

SPX at 1138.20 as this post is written

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