Real Estate Expert Home Price Forecast Not Yet Affected By Mortgage Rates

Real Estate Expert Home Price Forecast Not Yet Affected By Mortgage Rates

Real estate experts are seeing future home prices
through rose colored glasses

Unless you live under a rock (cheaper than buying a home) you’ve heard about how high mortgage rates have risen and you’ve heard the speculation that that might kill home prices. That last point is debatable for reasons I’ll go into later. So I was really curious what the Pulsenomics and Zillow Q2 2022 Home Price Expectations Survey of over 100 real estate experts was going to show for the future of home prices across the nation. That came out last week and, surprisingly, their outlook is not that much different than it was last quarter. See the orange line in the graph below.

In a nutshell they actually raised their 2022 forecast to 9.3% appreciation from 9.0% last quarter but over the entire 5 year period they knocked down their outlook just slightly – to 26.4% from 26.8%.

The five year outlook for home prices just got dialed back a smidgen from an all time high

I thought Pulsenomics founder Terry Loebs seemed a bit surprised by this outcome:

Rapidly rising mortgage rates and looming recession risk threaten to tame the pandemic’s hurricane-force winds that have whipped the market landscape and propelled U.S. home prices skyward. With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant. Even among those panelists who believe the U.S. housing market is now a bubble, most expect it to gradually deflate, not suddenly burst.

Clearly these folks don’t think higher mortgage rates are going to kill home prices, despite the fact that home builder and realtor stocks are crashing. How could that be? Well, it’s possible. You could definitely see more buyers and sellers stepping to the sidelines now, which would be bad for those stocks. However, if demand and supply both contract equally then you might not get any change in the trajectory of home prices.

However, there are a couple of underlying beliefs behind this outlook. First, only 32% of these experts think the housing market is in a bubble. That means that, in general, the group does not foresee any pressure for home prices to “normalize”. And, second, apparently these experts don’t expect mortgage rates to go that high. Their mean forecast for 2022 was only 5.6% (back when this survey was conducted) but we’ve already hit 6.3%. So how will they forecast home prices next time?

Chicago Area Home Price Outlook

Once again John Dolan, the market maker for the Case Shiller home price futures, has provided me with pricing for the Chicago area futures contracts so that we can get an idea of where the market thinks home prices are going in the metro area.

Unfortunately, right now there are only bid and ask pairs going out 2 years due to the tremendous uncertainty surrounding the housing market. But those futures prices imply a measly 0.7% per year appreciation rate. John Dolan points out that this is probably due to a lot of selling pressure in the contracts but, then again, that must mean that these sellers are not too optimistic about the outlook for Chicago area home prices.

You will note that there are asks plotted out beyond 2 years and they are showing some increase in the index values. However, we can’t read too much into that because there are no corresponding bids and it’s not like there is a lot of competition for selling those contracts.

Chicago home price futures imply very weak home price appreciation over the next few years

#RealEstate #ChicagoRealEstate #HomePrices

Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

Enter your email address:Delivered by FeedBurner
Advertisement:
Advertisement:

Welcome to ChicagoNow.

Meet
our bloggers,

post comments, or

pitch your blog idea.

Getting Real On Facebook

Subscribe To Getting Real

 RSS Feed

Enter your email address:

Delivered by FeedBurner


Google

Meet The Blogger

Gary Lucido

After 20 years in the corporate world and running an Internet company, Gary started Lucid Realty with his partner, Sari. The company provides full service, while discounting commissions for sellers and giving buyers rebates.

Featured Posts

How Realtor’s Lie To Get Your Business
The #1 Myth About Selling Your Home
The #2 Myth About Selling Your Home

Tags

market conditions (588)
Chicago home prices (240)
Case Shiller index (153)
Chicago foreclosures (138)
industry issues (92)
Chicago monthly real estate market update (92)
real estate agents (66)
Chicago real estate market (64)
foreclosures (60)
Neighborhood news (59)

Monthly Archives

June 2022
May 2022
April 2022
March 2022
February 2022
January 2022
December 2021
November 2021
October 2021
September 2021
August 2021
July 2021
June 2021
May 2021
April 2021
March 2021
February 2021
January 2021
December 2020
November 2020
October 2020
September 2020
August 2020
July 2020
June 2020
May 2020
April 2020
March 2020
February 2020
January 2020
December 2019
November 2019
October 2019
September 2019
August 2019
July 2019
June 2019
May 2019
April 2019
March 2019
February 2019
January 2019
December 2018
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018
January 2018
December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010

Blogroll

Getting Real’s favorite blogs

Crib Chatter
Real Estate Decoded
Smart Mortgage Advice
The Real Deal – Chicago

Latest on ChicagoNow

Real Estate Expert Home Price Forecast Not Yet Affected By Mortgage Rates

from Getting Real by Gary Lucido
posted today at 11:34 am

Don’t kid yourself, all lives don’t matter

from The Chicago Board of Tirade by Bob Abrams
posted today at 10:35 am

Jan. 6 hearings prove Trump is a tool. Still waiting to hear evidence he engineered the Capitol break-in.

from The Barbershop: Dennis Byrne, Proprietor by Dennis Byrne
posted today at 10:33 am

The Sun Sets on The Grand

from Pantry to Plate by Barbara Revsine
posted today at 10:07 am

Let your hair down and enjoy

from Margaret Serious by Margaret H. Laing
posted today at 9:30 am

Read these ChicagoNow blogs

Cubs Den

Chicago Cubs news and comprehensive blog, featuring old school baseball writing combined with the latest statistical trends

Pets in need of homes

Pets available for adoption in the Chicago area

Hammervision

It’s like the couch potato version of Mr. and Mrs. Smith.
Advertisement:

About ChicagoNow

FAQs

Advertise

Recent posts RSS

Privacy policy (Updated)

Comment policy

Terms of service

Chicago Tribune Archives

Do not sell my personal info

©2022 CTMG – A Chicago Tribune website –
Crafted by the News Apps team

Read More

Leave a Comment

Your email address will not be published.