Experts See Weak Recovery in 2013

By Steve Cook Real Estate Economy Watch

A panel of 111 leading housing economists, real estate experts, investment and market strategists have lowered their expectations of the housing markets and now see only a weak recovery taking place two years from now.

"This uninspiring view must be influenced by the persistently weak market fundamentals - high unemployment, supply overhang, an unabated foreclosure crisis, and constrained mortgage credit," said Robert Shiller, co-founder and chief economist of MacroMarkets, the firm conducting the monthly survey of experts. The survey is based upon the projected path of the S&P/Case-Shiller U.S. National Home Price Index over the coming five years.


"A few respondents do see a real recovery, predicting prices up 20 percent or so by 2015. The differences of opinion are interesting but unsurprising in light of continuing and unprecedented fallout from the historic bubble," said Shiller.

Terry Loebs, MacroMarkets managing director said that overall, the March expectations data are the most pessimistic collected to date, and added that after weak performance in the last quarter of 2010, actual home prices at the national level are now less than 1 percent away from establishing a new post-crash low.


"Many more experts are now projecting a double-dip after witnessing the double-dead cat bounce that came in the wake of expired government stimulus programs. In December, only 15% of our panelists were projecting that a new post-crash low would materialize for national home prices. Now, just three months later, almost 50% foresee a double-dip happening this year, and not a single panelist expects national home prices to recover to the pre-bubble trend in the coming 5 years," Loebs said.

The table below summarizes the panel's March projections for home prices for the coming 5 years.

Expected Home Price Changes By Year

S&P/Case-Shiller U.S. National Home Price Index

(Mean of all Panelist Responses)

Year-over-Year Cumulative

Year (Q4 vs Q4 Prior Year) (Q4 vs Q4 2010)

2011 -1.38% -1.38%

2012 1.26% -0.09%

2013 2.72% 2.67%

2014 3.19% 5.98%

2015 3.42% 9.64%

Source: MacroMarkets Home Price Expectations Survey, March 2011

Separately, the Federal government today confirmed that January home prices nationally have fallen to the lowest point since May 2004 and they are 16.5 percent below the April 2007 peak during the housing boom.

The Federal Housing Financing Administration found that prices fell 0.3 percent from December to January and for the 12 months ending in January,


U.S. prices fell 3.9 percent

Seasonally adjusted monthly price changes from December to January ranged

from -1.3 percent in the Mountain and South Atlantic Divisions to +1.6 percent in the West South Central Division.

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