Five more years of housing problems, with some stability in local markets
The housing market remains shaky and is unlikely to deliver significant growth in prices over the next five years, according to a new survey of economists, real estate professionals and analysts. Despite the survey's dim outlook, MacroMarkets said some local markets are strong even as home price growth remains abysmal nationwide. MacroMarkets and Pulsenomics researched and compiled the report on home price expectations after surveying 111 experts. Economists analyzed five-year trends stemming from the Standard & Poor's/Case-Shiller U.S. National Home Price Index. Home prices are expected to grow at a modest 1.1% nominal average annual rate through 2015, the report said. The only silver lining is home price expectations for 2011 are not as negative as previously forecasted. Still, MacroMarkets sees dark clouds ahead since the "average projection is somewhat more negative for each of the following four years." Of those interviewed, 73% said further policy action by the government to stabilize the housing market is either "highly likely" or "likely," while more than half said this type of action is undesirable. About 49% said they believe further government intrusion is unnecessary. Terry Loebs, founder of Pulsenomics, said, “This data suggests that regardless of when and how housing recovers, controversy will persist regarding the role of government in the market.” Loebs added, "More than half of panel members who indicated that more policy action is desirable or necessary suggested specific measures the government might focus on. We received a variety of constructive proposals. Several panelists clearly want or expect the government to be a catalyst for more effective mortgage refinancing and modification initiatives, as well as rental and other home equity conversion programs.” Meanwhile, Robert Shiller, MacroMarkets co-founder, said government intrusion is in many respects undermining economic confidence. “Markets and government institutions are visibly struggling to respond consistently to an unprecedented rash of crises and conflicts," said Shiller. "These struggles diminish confidence, which compounds the underlying economic stresses and lowers expectations.” Write to Kerri Panchuk.