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Zillow Survey: Home Prices to Bottom by 2013

By    |   Monday, 25 June 2012 04:32 PM

Most economists expect home prices will decline only slightly in 2012 and will increase thereafter, Zillow Inc.'s June 2012 Home Price Expectations Survey reveals.

The survey, which was conducted from May 31 to June 14 by Pulsenomics LLC, included responses from 114 economists, real estate experts and investment and market strategists.

Overall, home prices are predicted to decline 0.4 percent for 2012. Zillow noted that those surveyed were "largely in agreement on the trajectory of home prices nationally, signaling that a true bottom may be imminent."

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"In June 2010, the average cumulative appreciation in U.S. home prices expected by our panel was 10.3 percent for the years 2012 through 2014. Now, two years later, the average prediction among our experts for the same period is just 3.5 percent," Terry Loebs, founder of Pulsenomics, states. "This translates into $1.25 trillion less housing wealth than expected nationally over the coming three years."

The most optimistic quartile of experts predicts a 1 percent increase in home prices in 2012, while the most pessimistic quartile predicts a decline of 2 percent.

The survey results indicate that most experts expect home prices to increase for the remainder of the year, as home prices fell 2 percent in the first quarter of the year.

However, 56 percent believe that the U.S. homeownership rate in five years will be below 65.4 percent, the rate reported for the first quarter of 2012.

Moreover, one in five believes the rate will be at or below 63 percent. The lowest rate on record was 62.9 percent in 1965.

"It's good to start to see some convergence of expectations among economists, as it lends further support to the claim that a bottom is real," Stan Humphries, Zillow's Chief Economist, says.

"However, the fact that more than half of respondents believe that the homeownership rate will fall lower should be a sobering reminder that significant challenges remain ahead for the housing market, from negative equity to millions of foreclosed homeowners who now have impaired credit, making a return to homeownership harder than it would be otherwise."

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Monday, 25 June 2012 04:32 PM
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