Yesterday (September 21) MacroMarkets released its September 2011 Home Price Expectations Survey (pdf) results. This survey is now done on a quarterly basis.
The accompanying chart is seen below:
(click on chart image to enlarge)
As one can see from the above chart, the average expectation is that not only has the residential real estate market (nearly) hit a “bottom” as far as pricing; but that steady yet mild appreciation will occur through 2015.
The survey detail is interesting. Of the 111 survey respondents, 20 (of the displayed responses) foresee a cumulative price decrease through 2015; and of those 20, only four foresee a double-digit percentage cumulative price drop. Mark Hanson remains the most “bearish” of the survey participants with a forecast of a 22.03% cumulative price decline through 2015.
The Median Cumulative Home Price Appreciation for years 2011-2015 is seen as -2.53%, -2.62%, -.84%, 1.99%, and 5.44% respectively.
For a variety of reasons, I continue to believe that even the most “bearish” of these forecasts (as seen in Mark Hanson’s above-referenced forecast) will prove too optimistic in hindsight. Although a 22.03% 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 many people continue to 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, (even) from these price levels there exists outsized potential for a price decline of severe magnitude, unfortunately. I discussed this downside, based upon historical price activity, in the October 24, 2010 post.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1134.24 as this post is written
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