The nation’s housing market is on the verge of recovery, and prices should gain over 12% by 2014, according to the majority opinion in a poll of industry experts. The impact of the homebuyer credit expiration was reflected in the latest US Census figures, showing a double-digit spurt in housing starts offset by a similar drop in building permits, as caution descends on the sector. The following article from Property Wire has more on this.
Residential property prices in the US will begin a gradual recovery by next year and increase by more than 12.4% between 2010 and the end of 2014, according to a survey of economists, housing analysts, investment and market strategists.
The survey by housing analysts MacroMarkets also revealed that home prices nationwide are expected to have risen 4.9% in the 12 month period to the end of March 2010, but fallen 0.4% during the most recent quarterly period.
‘The survey results are important because they represent a consensus view among experts with rich and diverse knowledge. In the May survey they see only the slightest hint of a downdraft in home prices this year and after that a respectable uptrend in prices, well ahead of the likely inflation rate,’ said Robert Shiller, MacroMarkets co-founder and chief economist.
‘However, there were a number of panelists more or less sanguine than average, some significantly so, and this reflects continuing volatility and risk in the US housing market. The expectations within this first survey were provided following the end of the homebuyer tax credit and of the Federal Reserve’s $1.25 trillion mortgage backed securities purchase program. It will be interesting to see how panelist views evolve in future months,’ he added.
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He points out that concrete information and authoritative opinion regarding expected future home prices has tended to be sporadic and diffuse and the survey, the first of a monthly series is intended as one means to address this dearth of useful information.
Some of the forecasters surveyed by MacroMarkets were far from the average. Joseph LaVorgna, an economist at Deutsche Bank, sees home prices rising 37% by the end of 2014. Both Anthony Sanders, a professor of real estate finance at George Mason University, and Gary Shilling, president of A Gary Shilling & Co, expect declines of about 18%.
Shilling, whose firm provides economic consulting and investment advice, said excess inventories, including those from looming foreclosures, will pull prices down.
LaVorgna said a rapidly recovering job market should soak up most of that supply. He added that much of the excess supply is in remote or economically depressed regions and so isn’t relevant to most potential buyers, who will instead bid up prices in more desirable areas.
Separately, the US Census Bureau reported that single family housing starts in April surged to a seasonally adjusted annual rate of 593,000, up 10.2% from March. Ivy Zelman, chief executive of research firm Zelman & Associates, said builders stepped up production ahead of the April 30 deadline for sales qualifying for a federal tax credit, but since then have cut back.
The Census Bureau also reported that single family building permits in April fell 10.7% from a month earlier to a seasonally adjusted annual rate of 484,000. Zelman said builders have slowed down now that it is too late for buyers to get the federal tax credit. Before ramping up construction again, she said, builders will await signs that demand ‘isn’t falling off a cliff’ after being temporarily buoyed by the tax credit.
Zelman forecast that single-family housing starts for all of this year will total 559,000. That would be up 26% from 445,000 in 2009, but still off 67% from the peak level of 1.72 million in 2005. Zelman expects demand to be constrained by high unemployment, tight credit and the large number of Americans unable to sell their current homes because they owe far more than the market value.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.