Where Are House Prices Headed? (Expanded)

Below is a blog post by the KCM Crew at Keeping Current Matters in which they look at the projections made by several groups and economists of where they believe home prices will be by the end of 2013:

We are often asked where we think home prices are headed over the next year. Recently, several groups have stepped forward and given their projections as to what level of appreciation we can expect by the end of 2013. Here is what they said:

• Demand Institute Study: 1.75% appreciation
• Urban Land Institute: 2%
• Home Price Expectation Survey: 2.44%
• National Assoc of Business Economists: 2.8%
• Wall Street Journal’s Survey of Economists: 3.25%

All five groups are calling for home values to rise through the end of next year. However, none are projecting that we will hit historic annual appreciation levels (3.6%) that existed prior to the housing bubble.

Among these projections I would also like to take a closer look at our state. The CALIFORNIA ASSOCIATION OF REALTORS® is forecasting a 5.7% increase in the median home price by the end of 2013. That’s in addition to the projected 10.9% appreciation home values will have seen by the end of this year.

As national groups are calling for a 1-3% appreciation, we, in San Diego County have a much brighter forecast for the housing recovery. The increase in home values has and will continue to extend a lifeline to underwater homeowners who are near break even and should continue to stimulate sellers who have seen their equity grow in recent years to make the decision to move up and take advantage of the record interest rates offered by home mortgages.