Released Sept. 21, the survey of 111 economists, real estate experts and investment and market strategists was done for MacroMarkets LLC, a financial data firm co-founded by Yale University economist Robert Shiller, known for the S&P/Case-Shiller Home Price Index. It indicates home prices could grow at an average annual rate of 1.1% from 2011 through 2015.
A 1.1% gain would be a dramatic improvement over the previous five years. From the third quarter of 2006 through the second quarter of 2011, prices fell an average of 7.1% a year. So the experts are, in fact, forecasting a turnaround.
Nationally, prices are now about where they were early in the last decade. For a little perspective, MacroMarkets notes that prices soared by 10.4% a year from the first quarter of 2000 through the second quarter of 2006. Prior to that bubble, home prices grew by 3.6% a year from 1987 through 1999, which was in line with long-term averages.
Bubble buyers paid prices that were unjustifiably high. Their subsequent losses, while unfortunate, were not entirely unexpected, as home prices often fall back after a big jump. What was unusual in this case was that the bubble and collapse affected so much of the country; wild gyrations are typically confined to smaller pockets.
MacroMarkets points out that prices today are only about 6.8% below where they would have been if there had been no bubble or crash and prices had simply followed the long-term trend. That’s a little easier to live with than the fact that today’s prices are about 29% below their peak in 2006. Long-term homeowners have therefore not suffered anywhere near as much as those who bought in 2000 through 2006.