Economists hop on recovery bandwagon

B of A improved its price forecast for the year from a .5 percent increase over 2011 to a 2 percent increase, citing shrinking inventory and a shift toward short sales.

Perhaps the biggest about face on prices came from Zillow’s Chief Economist Stan Humphries, who said in February that home values, as measure by the popular site’s automated valuation mode, would fall 3.7 percent compared to 4.7 percent last year, and he didn’t forecast a national bottom for housing prices until 2013.

In late July, Humphries greatly revised his opinion, stating: “The housing market has finally turned a corner. In Q2, we saw continued momentum in the housing recovery, despite of some economic turmoil, like flagging job growth numbers and sovereign debt issues in Europe.

Nationally we hit a bottom in the first quarter of the year, and the Zillow Home Value Forecast shows that 67 of the 156 markets it covers will experience an increase in home values over the next 12 months. Nationally, Zillow forecasts home values will rise 1.1 percent.” That’s a net change of 4.8 percent in six months.

Though Zillow now believes the bottom was reached in the first quarter, the 114 economists it surveys every quarter for its Home Price Expectations Survey weren’t quite there yet the last time the survey was conducted in June.

The economists’ consensus was that home prices would fall 0.4 percent this year and bottom in 2013, which was more optimistic than their previous expectation of a 0.7 percent decline recorded in the March survey. When the survey goes out again in the September, price expectations are expected to continue to improve.

Both of the GSEs, Fannie Mae and Freddie Mac, have upped their take on sales and prices this year and next.

“The Freddie Mac House Price Index for the U.S. showed a brisk 4.8 percent gain from March to June 2012, the largest quarterly pickup in eight years; the national index posted a June-to-June rise of 1 percent, the largest annual appreciation since November 2006.

Further, the improvement was relatively broad-based. In fact, 34 states and the District of Columbia posted higher home values during the 12 months through June 2012, the largest number of states registering positive annual appreciation since April 2007,” stated Freddie’s economist in the August Economic Outlook.

Freddie now forecasts prices flat in 2012 and up 2 percent next year, an improvement over its June forecast of a .5 percent drop in 2012 and a 1.5 increase in 2013.