According to Zillow Home Price Expectations Survey conducted from July 22, 2013 through Aug. 1, 2013 by Pulsenomics LLC, more than 100 economists, real estate experts, and investment and market strategies forecasted 6.7% annual gain in home values for 2013. This is higher than the earlier expected growth of 5.4%.
Panelists said the expected median U.S. home values would rise to an average of $167,490 by the end of the year, an increase from $156,900 last 2012 and from the current value of $161,100. The survey shows that annual appreciation rates could approach new record highs by the end of 2017. Cumulatively, survey predicted that the values of residential properties are expected to rise 23.7% through 2017, on average, up from 22.3%.
“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 Dr. Svenja Gudell. “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. 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.”
The panelists were also asked, with the largest three-month increase in mortgage rates since 2003, if recent rise in mortgage rates presents a significant threat to the ongoing recovery of the housing industry. 88% of the panelist expressed their opinions that there would be no significant threat and among them, 61% said that interest rates would have to rise to at least 6% before it can post significant threats to the industry.
“Six percent is the minimum mortgage rate threshold that the most number of panelists view as a potential show-stopper for the recovery,” said Pulsenomics® founder Terry Loebs. “However, nobody should dismiss the implications for the housing market of the less popular view – held by 38 percent of our experts – that we are already flirting with a reversal of fortunes at or within about 100 basis points of prevailing mortgage rate levels.”