Experts Forecast Prices Will Cool Off in 2017

Home price increases will slow next year from this year’s above average pace of 4.75 percent, and in November 2017, values will reach the median price peak set a decade ago, in April 2007, according to the latest quarterly Zillow® Home Price Expectations (ZHPE) Survey sponsored by Zillow and conducted by Pulsenomics LLC.

Estimates based on the survey of 111 expert panelists, including many of the nation’s leading housing economists and researchers said they expect home price appreciation to be at almost 5 percent by the end of 2016, and slow down to 3.6 percent by the end of next year.

On average, panelists said they expected home values to end 2016 up 4.75 percent year-over-year a bump in expectations, up from an estimate of 4.5 percent annual growth the last time the survey was conducted in July.

Looking farther ahead, panelists on average said they expected the annual pace of home value appreciation to slow to 3.6 percent in 2017, 2.97 percent in 2018, to 2.7 percent in 2019 and to 2.6 percent in 2020, before accelerating slightly to a 2.84 percent annual pace in 2021. Cumulatively, experts said they expected home values to grow a total of 21.36 percent, on average, through 2021,

Median U.S. home values peaked at $196,600 in April 2007. On average, panelists said they expected the median U.S. home value to surpass this peak by November 2017 – more than a decade after pre-recession peaks. The most optimistic panelists said they expected home values to surpass pre-recession peaks by July of next year, on average, while the most pessimistic said they didn’t expect a full recovery in home values until January of 2020.

“More than 90 percent of the 111 panelists who participated in this quarter’s survey expect home value growth to be slower next year, and more than 85 percent of them foresee home value appreciation rates flat or lower compared to 2016 in every year through 2021,” said Pulsenomics founder Terry Loebs.  “While those figures represent a clear consensus that home value growth will moderate in the coming years, there is no consensus concerning the pace of the expected deceleration.  For example, the most optimistic experts project that U.S. home value appreciation will average more than 4 percent annually through 2021, while the most pessimistic expect an average annual rate of just 1.1 percent for 2017 and beyond.”

Click here for a list of estimates from the individual experts participating in the survey.

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