Economists Predict Home Value Appreciation Through 2017 to Exceed Pre-Bubble Norms

We’ve just finished compiling our Q1 2013 Zillow Home Price Expectations Survey (ZHPES), where professional forecasters provide predictions for housing market growth in the near term. This survey marks a break with the past in that the survey benchmark is now the national Zillow Home Value Index rather than the Case-Shiller index. The prediction for appreciation in 2013 is 4.6 percent, with the lowest projection at 3.5 percent depreciation and the highest at 8.5 percent appreciation. This edition of the survey was compiled from 118 responses, including the projections of economists, market and investment researchers and real estate experts.


Figure 1 shows the forecasted, cumulative home price changes by quartile among panelists. It shows that, while still below the pre-bubble trend line, respondents on average expect us to return to it by 2017.


It’s also interesting to break up the market by growth periods to compare historical annual average rates to expectations, as done in Figure 2 above. Covering expectations for annual average growth to the end of 2017, the average of all respondents, at 4.1 percent, is above the pre-bubble average of 3.6 percent. Indeed, the optimists, on average, seem to expect the recovery to continue modestly picking up speed. And while on average the pessimists expect things to slow, it would not be too far below the pre-bubble average.

Table 1 below shows responses from the five most pessimistic and five most optimistic real estate experts in the survey (sorted cumulatively over the full five-year horizon). The greatest cumulative (through the end of 2017) price depreciation forecast is from John Brynjolfsson of 11 percent, while the greatest appreciation of 77.9 percent was predicted by Ethan Penner.


In March of this year , Zillow and Pulsenomics gave out the Zillow Home Price Expectations Survey 2012 Crystal Ball Awards. And the winners are:

  • Brian Wesbury & Robert Stein (First Trust Advisors): #1 for the 1-Year Horizon (2012)
  • Thomas Lawler (Lawler Economic & Housing Outlook): #1 for the 2-Year Horizon (2011-2012), 2011 Expectations
  • Rob Stevenson (Macquarie Securities): #1 for the 2-Year Horizon (2011-2012), 2010 Expectations
  • Edward Pierzak (Henderson Global Investors): #1 for the 3-Year Horizon (2010-2012)


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