At the end of each quarter Zillow sponsors a survey of about 114 economists through Pulsenomics to see what their outlook is for home prices at the national level. The September Home Price Expectations Survey just came out and what's interesting about it is that on the whole these economists are remarkably more optimistic about home prices than they were just 3 months ago. In June they were projecting a cumulative appreciation out to 2016 of 10.2% but now they are projecting 15.2%. 15.2% over 5 years works out to 2.87% per year compounded, which coincidentally is exactly the same as my mortgage rate. I will tell you that I will be tickled pink if their forecast proves to be right because that will mean that I got to live in my house essentially for free - except for those damn property taxes.
The graph below shows the two sets of forecasts by year. Their optimism is pretty much spread evenly throughout the time horizon.
One other interesting tidbit in this survey. They asked these economists their opinion on whether or not the mortgage interest deduction should be eliminated and 60% agreed that it should over some time horizon - either immediately or phased out. Only 11% said it should remain as is. Personally, I think that with the budget problems in Washington the days are numbered for the government subsidizing home ownership. Realtors will be apoplectic, but not this one.