Economists are predicting a rebound in home prices next year that many feel signals the end of the real estate industry’s woes. Residential housing prices have been inching upward in many markets this summer, but it’s been more of a roller coaster ride than a steady ascent. Each uptick in one part of the country seems to be followed by news of a downturn somewhere else, with continued uncertainty about the future of America’s housing market the result. However, economists say the light at the end of the tunnel is starting to brighten; and they are predicting modest but steady increases in housing prices beginning in 2013 and continuing through at least 2016.
The rebound predictions were compiled from more than 100 economists, real estate experts and investment strategists who were asked to predict the trend of U.S. home prices over the next 5 years. Commissioned by Zillow, the Home Price Expectation Survey is conducted every quarter by research consultancy Pulsenomics LLC. (Click the link to access the full survey report.) This is the first optimistic report since the mortgage and financial crisis sent the economy and the housing industry reeling. Real estate markets are notoriously local, but signs of nationwide improvement on the horizon are cause for celebration.
Unfortunately, survey respondents felt that the long-term effects of the recession will also cause a decrease in home ownership rates. The majority (56%) expect home ownership to drop below 65.4% over the next 5 years and 20% believe home ownership rates could drop as low as 63%, precariously close to 1965′s record low of 62.9%.
While the number of available homes is contracting in many markets, driving prices up in areas; housing prices are not expected to regain their inflated pre-recession values. Resetting consumer thinking about housing prices will continue to challenge real estate agents and is sure to play a role in the market’s recovery.
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