For the first time, the average annual growth rate for home values in the next five years looks to surpass pre-bubble levels, according to the first quarter Zillow Home Price Expectations Survey.
Where the pre-housing bubble (1987-1999) appreciation rate was 3.6% per year, notes Zillow, a nationwide panel of 118 economists and real estate experts predicted that home values will rise an average 4.1% annually from 2013 through 2017.
Additionally, survey respondents expect home values will rise another 4.2% on average in 2014, before moderating to annual appreciation rates between 3.6% and 3.8% for 2015, 2016 and 2017.
“The panel is quite bullish on home prices near-term, considering a pre-bubble average appreciation rate of 3.6 percent per year,” said Zillow Chief Economist Dr. Stan Humphries. “That said, their expectations are a bit shy of the home value gains of 5.5% that we saw in 2012, implying some moderation in the pace of gains.”
The panel’s outlook, says Humphries, is consistent with home value growth fueled by “tighter-than-normal” inventory of for-sale homes, as well as a robust demand for high affordability.
While the most optimistic quartile of respondents predicted a 6.1% increase in home values in 2013 on average, the most pessimistic predicted an average increase of 3%.
Written by Jason Oliva
