Economists Far More Optimistic on Future of Housing Prices: Survey
By: Tory Barringer
A strengthening housing market in the past few months has economists making more bullish predictions about the recovery, Zillow revealed Thursday.
The company released the results of its most recent Home Price Expectations Survey, showing that economists surveyed expect home prices to rise by a total of 2.3 percent during 2012. This change in sentiment is a major turnaround from June, when respondents predicted home prices would experience a net decline this year.
Predictions were varied, but respondents seemed to agree on a positive trend: The most optimistic quartile of panelists predicted a 4.4 percent increase in 2012 prices, while the most pessimistic panel predicted an average increase of 0.3 percent.
Economists surveyed also revised their forecasts for 2013-2016, predicting steady price growth in each year.
“This is further evidence that we’re seeing a true recovery in the housing market,” said Dr. Stan Humphries, chief economist for Zillow. “Not since mid-2010 – in the midst of the homebuyer tax credits – have we seen this group so bullish on housing. It’s refreshing to see this optimism at a time when the market seems to be making an organic recovery, in the absence of an artificial stimulant like the tax credits.”
In addition, the survey showed that more than half of respondents want to eliminate the mortgage interest tax deduction, with 50 percent saying it should be phased out gradually and 10 percent wanting it cut as soon as possible. Thirty percent said the deduction should have more eligibility restrictions placed on it, while 11 percent believe it should remain as-is.
“Although the mortgage interest deduction remains enormously popular with existing and aspiring homeowners, it costs the federal government about $90 billion a year,” said Terry Loebs, founder of Pulsenomics LLC, the company that conducted the survey for Zillow.
“Time will tell whether the unprecedented fiscal challenges facing the U.S., coupled with a housing market now on the mend, will embolden more policymakers to touch this lightning rod,” Loebs continued.
The survey panel also gave input on government policies and the election. When asked about the use of eminent domain to seize selected underwater (but current) mortgages, an overwhelming 91 percent said they oppose the idea. Some county governments are evaluating such a proposal, and the fight has even gone to Capitol Hill.
As far as November’s presidential election goes, Mitt Romney has more support from those surveyed, with 45 percent saying they will vote for him over President Obama’s 34 percent. Regardless of who they would vote for, 47 percent of respondents said they believe Obama would promote more significant housing policy changes, while 32 percent said they don’t think there would be any real difference with either candidate.
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