Zillow Q2 2015 Home Price Expectations Survey – Summary & Comments

On May 12, 2015, the Zillow Q2 2015 Home Price Expectations Survey results were released.  This survey is done on a quarterly basis.

An excerpt from the Press Release:

Most of the 111 panelists who participated in this survey expect home values to level off in the next several years. The panel expected home values to rise 4.3 percent in 2015, to a median of $184,615. They expected that the average annual growth rate through 2019 would slow to 3.6 percent.

"The overall outlook for U.S. home values is largely unchanged compared to last quarter, and the expectations gap between the least optimistic and most optimistic experts continues to narrow," said Pulsenomics founderTerry Loebs. "However, the most optimistic panelists still expect home values to grow at more than twice the average annual pace of the least optimistic panelists. The gap between the two groups is significant, and amounts to a 2 ½ year difference in when the two groups expect U.S. home values to eclipse their pre-recession peak."

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Various Q2 2015 Zillow Home Price Expectations Survey charts are available, including that seen below:

As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the U.S. Zillow Home Value Index, will continually climb.

The detail of the Q2 2015 Home Price Expectations Survey (pdf) is interesting.  Of the 111 survey respondents, only one (of the displayed responses) forecasts a cumulative price decrease through 2019; and even that one does not foresee a double-digit percentage cumulative price drop.  That forecast is from Mark Hanson, which foresees a 8.16% cumulative price decrease through 2019.

The Median Cumulative Home Price Appreciation for years 2015-2019 is seen as 4.30%, 8.37%, 12.04%, 15.58%, 19.12%, 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.  From a longer-term historical perspective, such a decline is very mild 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, 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 titled “What’s Ahead For The Housing Market – A Look At The Charts.”

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2098.76 as this post is written