Zillow and Pulsenomics recently came out with their first quarter home price expectations survey of more than 100 real estate experts. The graph below provides their updated view (the orange line) from December, dropping 2018 appreciation from the time horizon and just focusing on the next 5 years, including 2019.
If you go back to December's post and back out the 5.8% appreciation they had in there for 2018 you would see that they were basically forecasting 15.7% for the next 5 years. Contrast that to the much more optimistic 17.1% that they now have in their forecast. Pulsenomics® Founder Terry Loebs attributes this greater optimism to the recent downturn in mortgage rates.
You'll notice that they are predicting 4.3% appreciation for 2019, which is slightly lower than the 4.7% annual appreciation recorded by the Case Shiller home price index for December. Also, I should point out that 50% of the survey respondents felt that there was downside risk to home values in the long run.
Chicago Area Home Price Outlook
Since the Pulsenomics survey doesn't go to the metro area level I always like to look at the Case Shiller futures market to get a forecast for Chicago area home prices. However, it's so bleak (more on that in a minute) that I decided I better check the futures contracts for the composite index. Well, as it turns out that is not nearly as optimistic as the Pulsenomics experts are either. In fact, if those experts are really confident in their forecasts they really ought to buy those long dated contracts because they can make a few bucks on their superior knowledge.
Rather than go into that calculation let me focus on the Chicago contract. The graph below was provided by John Dolan, who makes the market in these contracts, and it shows the bids and asks on the Chicago futures contracts out to November 2022. As you can tell it's pretty darn flat. In fact, the numbers work out to essentially zero cumulative appreciation for the 4 year period ending in September 2022 (the November contract in the graph below).
I don't know what else to say other than that's kinda bleak isn't it? So I'll leave you with that thought.
#ChicagoHomePrices #HomePrices #HomePriceForecast #Pulsenomics
Gary Lucido is the President of Lucid Realty, the Chicago area's full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.