Real Estate Market

Forecast mashup reveals mixed hope for 2012 national housing market

by Broderick Perkins

(1/11/2012) - A mashup of several market indices puts the housing recovery start somewhere between 2012 and 2013 thanks, in part, to growing consumer confidence in the economy.

• Clear Capital's 2010-2011 Home Data Index Market Report forecasts a slight 0.2 percent increase in home prices nationwide in 2012 after the market neared bottom in 2011, falling 2.1 percent since 2010. That would be the first increase in home prices since 2006.

The index includes repeat sale and price-per-square-foot indices of single-family, multi-family and condo homes in both fair market and real estate owned (REO) transactions.

• The Zillow's December 2011 Home Price Expectations Survey of economists, real estate experts and investment market strategists similarly expected U.S. home prices to decline 1.57 percent in the fourth quarter of 2011, compared to the fourth quarter 2010. Prices are forecasted to decline further by an estimated 0.18 percent by the end of 2012. After 2013, the panelists expect a relatively steady annual appreciation rate of roughly 3 percent through 2016.

The forecast is also based on the projected path of the S&P/Cash-Shiller U.S. National Home Price Index (HPI).

Both Clear Capital and the HPI reported by the end of 2010 home prices had fallen back to early 2001 levels - 10 years ago.

• Fannie Mae's December 2011 National Housing Survey of homeowners' and renters' attitudes about housing and the economy found them expecting home prices to increase by 0.8 percent in 2012, in line with forecasts.

For the first time since February 2011, more respondents said their financial situation will get better over the next year than those who say it will stay the same. That's due in part to a 5 percentage point growth in the number of consumers who say their income is significantly higher than it was a year ago.

"December attitudes have rebounded from the lows seen during the debt ceiling debate and economic deterioration of Europe this past summer," said Doug Duncan, vice president and chief economist of Fannie Mae.

Clear Capital highlights

The expected 0.2 percent increase in home prices nationwide will vary widely on the local level.

"Although the national numbers suggest markets are flat, when looking at individual metro markets it turns out only 24 percent of them showed signs of stabilization in 2011, while the others are still moving more dramatically higher or lower. What's most interesting is that the lower segments of appreciating markets are driving much of the current price growth. In places like Florida, which have historically been hard hit, we are now seeing considerable activity in lower-end properties as demand continues to heat up," said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital.

Zillow highlights

The trend of eroding expectations for a housing market recovery may have come to a halt, but panelists' optimism about recovery varied widely, indicating a sluggish recovery, according to Zillow.

When looking at housing market performance through the five year period ending in 2016, the most optimistic quartile of panelists projects as much as an 18.3 percent price growth over the next five years, while the most pessimistic quartile projects a 1.4 percent price decline.

"The average survey data are still consistent with a sluggish recovery scenario where eventual price increases will be less than those thought of as normal during the years preceding the national housing bubble," said Terry Loebs, founder of Pulsenomics LLC, Zillow's survey conducting firm.

Fannie Mae highlights

Twenty-two percent of Americans say the economy is on the right track (up by 6 percentage points since November). The percentage who say the economy is on the wrong track dropped to 69 percent (a decline of 6 percentage points).

Seventy-one percent of respondents say it is a good time to buy a home (up 3 percentage points since last month), but only 11 percent say it is a good time to sell.

"There is marked improvement in consumer sentiment regarding the direction of the economy, personal finances, and future home price expectations. However, while December results show that more Americans think the economy is on the right track, consumer attitudes are still at depressed levels, with more than two-thirds saying that the economy is on the wrong track," Duncan said.

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