Home Price Forecast: No Real Change From Last Quarter

Home Price Forecast: No Real Change From Last Quarter

Yeah, this quarter’s Pulsenomics home price forecast is pretty boring. The 111 panelists surveyed in the Home Price Expectations Survey sponsored by Zillow pretty much landed where they did back in February. From 2014 to 2019 they are projecting cumulative appreciation of 19.2% vs. last quarter’s 19.4%. For 2015 they are projecting 4.3% appreciation, which is also down slightly from last quarter but still above the historic average.

Zillow home price forecast

Other outcomes from the survey include:

  • 47% of the panelists thought mortgage lending standards are too restrictive
  • 44% said “renter households would continue to outpace homeowner households, largely because of financial barriers, such as large debt burdens and slow wage growth.”
  • 42% said “looser credit restrictions, an improving economy, and the rising cost of renting would drive more people to buy in the next one to two years”

Everybody seems to be worrying about people renting but I don’t think the current percentage is that different from what it has been historically. Furthermore, renting is not a bad financial strategy – especially when you factor in the flexibility it affords.

Outlook For Chicago Area Home Prices

In order to get a perspective on the direction of Chicago area home prices I look to John Dolan’s April recap of the Case Shiller home price futures market. The market is pretty thinly traded but it’s all we have to go on. It looks like the pricing for the November 2017 contract has moved up a bit since February when we last checked in. It’s now showing a midpoint of 149.5 and that represents the data for September 2017. Comparing that to where we were in September 2014 results in a total gain of 14.1% over the 3 year period or 4.5% per year, which is more optimistic than the national outlook from Pulsenomics.

Case Shiller Chicago futures prices

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