The country is on the verge of a double-dip in housing prices according to new survey from MacroMarkets LLC. The financial technology company asked a panel of 111 economists, real estate experts, investment and market strategists to project the path of housing prices over the next five years based on the S&P/Case Shiller U.S. National Home Price Index.
Robert Shiller, MacroMarket's cofounder and chief economist said panelists' sentiments regarding the housing market continue to deteriorate. "Now they are expecting only a weak recovery and even that is not until 2013." Shiller blamed the outlook on market fundamentals; high unemployment, high inventory, and continuing foreclosures and tight credit.
Terry Loebs, MacroMarkets managing director said that overall, the March expectations data are the most pessimistic collected to date. After the weak performance in the fourth quarter of 2010, home prices nationally are only 1 percent above what would be a new post-housing crash low. "Many more experts are now projecting a double-dip after witnessing the double-dead cat bounce that came in the wake of expired government stimulus programs," Loebs said.
The Case-Shiller Index peaked at around 180 in late 2005 before dropping to the mid 120s in the first quarter of 2009. Since then it has risen slightly twice and dropped again each time. It tested the 2009 low once in 2010 and is now below even that mark. Loebs said that in December only 15 percent of the panelists were predicting a new low but now 50 percent see a double dip this year and "not a single panelist expects national home prices to recover to the pre-bubble trend in the coming five years."
The consensus of the panel is that prices by the fourth quarter of 2011 will have declined 1.38 percent year-over-year. By the same point in 2012 there will be a slight 1.26 improvement, but then the panel sees things picking up with a 2.72 percent increase in 2013, 3.15 percent in 2014 and 3.42 percent in 2015. The average expectation for a cumulative increase over the next five years is projected at 9.64 percent.
The panelists displayed little real consensus. A handful sees an incredibly bleak future for housing. Eight project declining prices throughout the five year period with a cumulative negative change over five years in the high teens. Others see a return to real price growth with 5, 7, even 10 percent single year appreciation in the out years. Shiller said, "The differences of opinion are interesting but unsurprising in light of continuing and unprecedented fallout from the historic bubble."