US home prices could increase by up to 4.9% in 2013
by RAY CLANCY on JANUARY 1, 2013
A nationwide panel of more than 100 professional forecasters in the United States expects home prices to rise 3.1% in 2013 after finishing 2012 up more than 4.6%. The findings from the December 2012 Zillow Home Price Expectations Survey reflect growing optimism in the housing market.
The survey of 105 economists, real estate experts and investment and market strategists is based on the projected path of the S&P/Case-Shiller US National Home Price Index during the coming five years. Survey respondents said they expect home prices to have increased in 2012 by 4.6%, a considerable rise from their more modest forecast of 2.3% from the September 2012 survey. Respondents also indicated they expect home prices to rise 3.1% in 2013, up from an expectation of 2.4% in September, and by more than 3% annually through to 2017.
‘An organic recovery in the housing market really took hold in the latter half of 2012, and this improvement is echoed in some of the most optimistic price projections we’ve seen in years from this group,’ said Zillow chief economist Stan Humphries, ‘Record levels of affordability and an improving overall economic picture have really helped buoy the market and have us well positioned for continued growth, albeit slightly slower, in 2013 and beyond,’ he explained.
The most optimistic quartile of panelists predicts a 6.3% increase in 2012, on average, while the most pessimistic predicts an average increase of 3%. For 2013, price change projections range from 4.9% among the most optimistic quartile to 0.8% among the most pessimistic, on average. The panel was also asked to gauge how certain proposed changes to the mortgage interest deduction (MID) system may affect the real estate market. The survey examined three scenarios: reducing the maximum MID eligible mortgage amount to $500,000 and eliminating the allowance for second homes; capping all itemized deductions, including the MID, at $25,000 per year; and eliminating the MID over a multi year period.