Real estate market experts predict house value growth of 6.7% in the US in 2013
Economists, real estate experts and investment market strategists expect home values in the United States to increase by 6.7% during 2013. The Zillow Home Price Expectations Survey also found that the experts expect median home values to rise to $167,490 by the end of this year, up from $156,900 at the end of 2012 and $161,100 currently.
Based on current expectations for home value appreciation over the next five years, the panellists on average predicted that home values could approach new record highs by the end of 2017, coming very close to the previous peak level of $194,600 set in May 2007. Overall they see the property market recovery continuing and are not worried by mortgage rate rises at this stage. However, most believe that rates of 6% or higher would pose a significant threat to the housing recovery.
Panellists expect annual home value appreciation rates this year to end on a strong note, before slowing considerably from 2014 through 2017. They also said that they expected appreciation rates to slow to around 4.4% in 2014, on average, unchanged from the previous survey. This rate is expected to slow further to 3.6%, 3.5% and 3.4% in 2015, 2016 and 2017, respectively. Cumulatively, survey respondents predicted home values to rise 23.7% through 2017, on average, up from 22.3% in the last survey.
‘Short term expectations for home value appreciation through the end of this year are consistent with a nationwide housing market recovery that is both strengthening and widening, but still coping with high levels of negative equity, high demand and low inventory. Combined, these factors will continue putting upward pressure on home values for the next few months,’ said Zillow senior economist Svenja Gudell.
Quote from PropertyForum.com : “The national housing recovery in the United States has kicked into higher gear in the second quarter of 2013 after a relatively slow start to the year, the latest index shows.”
‘But the days are numbered for these kinds of market dynamics, as investors begin to pull out of some markets, mortgage interest rates rise and more inventory becomes available. Over the next few years, these trends will help the market stabilize and will bring home value appreciation more in line with historic norms,’ she explained. ‘As long as mortgage interest rates don’t rise too far and too fast, most markets should be able to absorb these changing dynamics while still remaining healthy,’ she added.
The most optimistic quartile of panellists predicted a 9.3% annual increase in home values in 2013, on average, while the most pessimistic quartile predicted an average increase of 5.1%. Expectations among the optimists and pessimists were up from prior predictions of 6.6% and 4.2% respectively. Through 2017, the most optimistic panellists predicted home values would be 9% above their 2007 peak levels, while the most pessimistic predicted home values to remain 9% below peak levels.
Panellists were also asked, on the heels of the largest three-month gain in mortgage rates since 2003, if recent increases in mortgage rates presented a significant threat to the ongoing housing market recovery. Among those expressing an opinion, 88% said no. Those panellists who responded no or not sure were then asked what minimum mortgage interest rate on a 30 year, fixed rate mortgage would pose a significant threat to the housing recovery. Among these respondents, 61% said interest rates would have to rise to at least 6% to create a significant threat.