Today’s Wall Street Journal had an interesting article about predictions for future home price trends in the U.S. Some of the takeaways are:
- Some of the experts they spoke with expect the housing market to begin rebounding in late 2009, others believe it will be 2010 or later.
- Consumers, on the other hand, are more optimistic, according to three October 2008 surveys that showed 61% of homeowners believe the price of their home will stabilize or increase in the next 6 months, 91% believe real estate is still a good long term investment, and 51% believe it’s a good time to invest in real estate (compared to 32% for stocks.)
I’m curious about that last 51%, since the respondents were just identified as 5000 people in an online survey by Citigroup. (The first two studies were of homeowners, so it could be argued that they’re a real estate-friendly group to begin with.)
No matter what the experts say, buyers set the tone of the market – when they start buying eventually home values strengthen. If that survey includes people who plan to buy a home in the next year or two but who are waiting for the right timing, it’s a study in which the attitude of the respondents actually has control over the real life outcome.
Another takeaway is that real estate is highly localized. The economists quoted in the article expect home prices to eventually rise slightly more than inflation, and keep pace with per capita income. However, areas with limited land availability and restrictions on growth are likely to see sharper movements in price. These are definitely criteria that affect the Seattle area market.
The article has more national information, and is worth a look – click here to read it.
Here’s their chart showing home price trends over the past year in 20 metro areas.
