The results from a recent survey of more than 100 economists, real estate experts and investment strategists asking each participant to project the path of the S&P/Case-Shiller U.S. National Home Price Index over the next five years show a wide range of answers.
Some participants foresee a turnaround in 2013; others not until 2015. But most agree, it will not occur in 2012. See Inman News’ story: Home prices may keep sliding into 2012
When do you think a turnaround will occur?
RSB
I guess all of those 100 economists, real estate experts, and investment strategists are just a “lot of fools” and “El Negativos”.
Sandbank
See where the Washoe County Treasurer says downtown Reno is overvalued by $60 million, and that downtown Reno is now at a value less than it was in 1983?
In 1983, downtown wasn’t the collection of pawn shops, tatoo parlors, liquor stores, 3 for $10 tee shirt stores, and dive homicide of the month bars.
Of course, to talk about that $60 million overvaluation would make one an El Negativo it appears, so let’s just pretend that downtown in booming.
Steve Herschbach
“When do you think a turnaround will occur?”
Turnaround? The more interesting question is turn around into what? I get the feeling some people think we will return to rapid property appreciation. I think the party is over myself.
So I expect housing to stabilize over the next five years and return to roughly tracking inflation by the end of the decade. Boring stuff. Of course I am not an expert so what do I know?
Merry Christmas!
E.Edward
When will these pronounced wizards finally have there come-to-Jesus???
Here they are formulating all these predictions and every one of them always manage to leave out the most import piece of catalyst in there hypothesis……Yep interest rates.
This fantasyland of low interest rates cannot and will-not last. Yes its true… just like the interest rate hike of 2006/7 that brought the whole house of cards down, the same will happen again here in this futile attempted jumpstart-less bubble.
The fed funds rate is near 0% {all time low}… So live it up no worries! Go buy that artificially over-priced home, Max out those no interest for 18 month credit cards, Lever yourself to the hilt …… Its just solidifies the near future and there’s plenty of us out there that will take that crap off your hands and the banks for fifty cents on the dollar later!
Keep your soup cups handy!
Roger Ewing
On a large scale, I see no fundamental reason for the real estate market to change course for the next couple of years, particularly in 2012. With interests rates low, underwriting guidelines becoming even tighter, and high unemployment, the housing market will continue to languish.
Politically, we are caught between two forces. The GOP on the one hand, caring only about the wealthy. And Obama on the other, caring only about the poor. The middle class is left to fend for themselves and pay the tax burden for the others. This disparity is leading toward the collapse of the engine that drives the economy, middle class America.
No, will not see a turn around in home values until difficult economic and social corrections are made in the America.
Transplant
While I agree whole-heartedly with what you’ve written, Roger Ewing, one point just falls flat; “Obama…, caring only about the poor.” If only that were true, we might start to see the beginnings of a turnaround. The main difference between the Democrats sucking up to Wall Street versus the Republicans is the lack of loud slurping noises. Until the piles of free money currently being tossed into the flames on Wall Street are instead redirected to the people who will actually spend it, namely the working poor and middle class, the economy will continue to suck. Pitting the middle class against the poor feeds right into the divide and conquer strategy of the corporations-are-people crowd. What little political pull the middle class has is weakened by splitting us off from our natural allies, the poor. These days, anyone in the middle class is just one medical diagnosis or pink slip away from poverty, anyway.
MikeZ
Edward, why can’t low home mortgage interest rates last?
E.Edward
Why did rates spike in the last bubble ?? I’m sure nobody wanted that!
But ok-how about inflation and bond sell-off just for starters? Can you see your dollars buying less and less everyday?…..I sure can!
+ really how long can any entity loan and yield nothing?? especially a broke one.
Whats the out-come here and best case scenario? Japan Style? with 5 trillion spent, 22 million looking for work and 49 million on food-stamps…..Not-a-chance!
{oh and by the way that 49 mill. that’s up 50% in 2 1/2 years} Think the population are finding jobs? Think again!
These rates are gonna spike sooner or later and its gonna hit like a freight train!
Keep your soup cans handy.
Just my little ol’ opinion.
MikeZ
These rates are gonna spike sooner or later and its gonna hit like a freight train!
Eventually, sure, but that’s later, not sooner, when our federal monetary policy stops pushing rates down so hard … but that’s not going to happen until the Fed believes we’re well on our way to recovery. Agreed?
E.Edward
Look bonds are gonna sell off whether the fed likes it or not {thanks to the inflation there creating} and rates are gonna jump… sooner than later. In the meantime what do ya do? go buy some artificially inflated asset?……..No thanks
Recovery? This phony recovery is nothing more than a reflection of these “pushed down” rates, and guess what? when rates are forced up, thats right….. No more phony recovery!
Nothing’s changed, Nothing’s fixed, Just more people in-debt spending there fresh-new credit cards and paying more for things!
booch221
What inflation? Economists at J.P. Morgan project that the consumer-price index will rise just 1.2% in 2012 according to the über conservative Wall Street Journal.
http://online.wsj.com/article/SB10001424052970203686204577116521286547832.html
That’s why the Fed signaled it will keep interest rates low for another two years.
In fact, the BIG fear since the global financial crisis began has been deflation, NOT inflation. Don’t get me wrong, inflation is bad, but deflation is worse and harder to stop.
MikeZ
re: E. Edward
Bond rates? The context here is mortgage rates; bond rates do not drive mortgage rates! Fed lending rates drive mortgage rates (agreed?) and Bernanke says they will remain exceptionally low until at least mid-2013.
re: the rest of your points: I’m not claiming that there is a real recovery underway or the correctness of Fed monetary policy, only your expectation that mortgage rates are going to spike and when.
booch221
It will happen at different times in different locations. Knowing when the country as a whole will turn is really not very useful to a potential home buyer. DC is already seeing price appreciation. Las Vegas will be a long time coming.
But what I’d really like to know is when Reno will hit bottom.
I once read an article, can’t remember where, that said a market has turned when ALL of the following four conditions are met:
1. Sales increase four quarters in a row.
2. Prices increase four quarters in a row.
3. Inventory decreases four quarters in a row.
4. Foreclosures decrese four quarters in a row.
Allstate
“bond rates do not drive mortgage rates! Fed lending rates drive mortgage rates…”
Good one, MikeZ. You got it exactly backwards. Mortgage rates are tied to bond rates, primarily the US Treasury long bond rate. They pretty much move in lockstep. Used to be the 30 year was the standard long bond that set mortgage rates, but ever since the Treasury eliminated the 30 year and then brought it back, the 10 year Treasury has been the benchmark for mortgage rates. Note that I am not saying that the long Treasury and mortgage rates are the same. They are not. The mortgage rates will always be higher than the Treasury. But mortgage rates move in tandem with the long bond.When the long bond rate goes up, so do mortgage rates; when the long bond rate goes down, so do mortgage rates.
Mortgage rates do not move in tandem with the Fed discount rate. Simple observation of the rates will disclose this. The Fed discount rate has been 0.25% for about 3 years now. The 10 year treasury has moved around over the past three years, and the mortgage rates have followed it, up and down. If mortgage rates were tied to the Fed window, they would have been absolutely stable for 3 years. They have not.
And, the Treasury rate is set by the market. What are investors willing to settle for in exchange for the safest investment in the world? Pretty darn little over the past 3 years, and thus the historically low mortgage market.
MikeZ
Oh yeah. My bad. Brain fart!
Sully
http://www.mortgagenewsdaily.com/01042012_housing_market_reform.asp
Apparently the FED has come to the conclusion that people making $10/hr are not going to be buying houses anytime soon and something should be done about clearing out all these foreclosures.
booch221
Forecast issued for areas with most expected appreciation and depreciation:
Other markets forecasted to experience more than 5 percent in price declines during 2012 are Reno-Sparks, Nev.; Las Vegas-Paradise; Sacramento-Arden-Arcade-Roseville, Calif.; and Fresno, Calif.
http://www.mortgagedaily.com/Consumers/HomePriceForecast010512.asp