North Shore Views
After five long years of price declines, we are finally seeing some appreciation in housing prices. So, what can we expect in the coming few years and how quickly are we going to get back to the price levels we had in 2006?
There’s a nationwide panel of 118 economists, industry analysts and real estate experts who are surveyed about their price forecasts for the next five years. Their answers are then mashed together to give one “answer.” The idea is that some will be too bullish, some will be too bearish but the average of all their answers will more than likely be pretty close to the truth. At least that’s the theory.
So, what did our esteemed panel come up with? They believe that prices will rise an average of 4.6% in 2013, 4.2% in 2014 and then it will balance out to around 3.7-3.8%, which is close to the annual price appreciation we saw pre-bubble. That results in a cumulative price appreciation of 22% by 2017.
If you’re not comfortable with the “mash up” answer of 118 economists, here’s what a handful of big kahunas in the industry are forecasting for prices. The important takeaway is that every one of them has upgraded its projection for price appreciation vs. the previous forecast:
All well and good you say, but (if you are a homeowner) you are probably anxious to know when we will finally get back to those lofty 2006 price levels? Not anytime soon…at a typical pre-bubble rate of appreciation, it wouldn’t be before 2020. The Case-Shiller price index graph makes the point that, over the long run, price appreciation is gradual and that the period from 2000 to 2006 was an aberration that we shouldn’t expect to happen again.
The implication is that, if you are trying to decide when’s the best time to sell your home, you probably shouldn’t gamble on the unlikely scenario of dramatic price appreciation. Better to let your life goals and priorities determine when you sell.
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