U.S. Housing Market Predictions for 2011 and Beyond
Betty Anne Burns, Broker, Realtor, Instructor & NABOR Award Winner (985) 630-1755 – 2011RealEstate@gmail.com Top Agent Realty, 1011 N. Causeway, Mandeville, LA 70471
U.S. Housing Market Predictions for 2011 and Beyond This is an organic story that is still unfolding. We will continue to add housing market predictions and keep you updated throughout 2011. Welcome to our housing market prediction tracker. Or as we like to call it, the predict-o-meter. On this page, you’ll find a collection of housing market forecasts and real estate predictions for 2011 and beyond. We have a system of automated alerts that notifies us whenever a housing market prediction has been published online. This page is updated often, as new information and insight becomes available. Current consensus: Home-buying activity will rise slightly in 2011. Home prices in most areas could decline another 6 – 9 percent in 2011. Mortgage rates will gradually increase between now and the end of next year, reaching or exceeding 5 percent. Unemployment will continue to be the biggest drag on the housing market. Foreclosure moratoriums or ―freezes‖ will also delay housing recovery. The above consensus is based on the following predictions. The most recent items are listed at the top.
Housing Predictions to Date The housing predictions below have been organized in reverse-chronological order. You’ll find the most recent commentary at the top of the page.
On December 8, 2010, Oliver Chang and other financial analysts from Morgan Stanley released a report with their thoughts on the housing market. According to the report, the analysts expect home prices in the U.S. to fall as much as 11 percent by 2012. The reasons cited? Supply and demand, of course. ―We see the trough occurring in 2012 instead of our previous call of 2011,‖ said Chang. -Prediction made in December 2010
Pete Flint, chief executive of Trulia.com, feels that rising mortgage rates will reduce housing demand in 2011. ―Nationally, prices will decline between 5 Betty Anne Burns, Broker, Realtor, Instructor & NABOR Award Winner (985) 630-1755 – 2011RealEstate@gmail.com Top Agent Realty, 1011 N. Causeway, Mandeville, LA 70471
percent and 7 percent,‖ Flint said, ―with most of the decline occurring in the first half of next year [2001].‖ -Prediction made in December 2010
Rick Sharga, Senior VP of the foreclosure-tracking company RealtyTrac, sees a rise in the number of pre-foreclosure homes over the next few months. He predicts that many of these homeowners will simply walk away from their homes. ―Even with today’s low interest rates,‖ Sharga said, ―you’re looking at an average of $1,000 or more in mortgage payments on loans that are overvalued by about 30 percent. That is where you will see a high level of walkaways.‖ -Prediction made in December 2010
Freddie Mac appeared on our housing market predict-o-meter back in October. Here’s another set of predictions, this time from their chief economist Frank Nothaft. This commentary comes from the Freddie Mac blog, where Mr. Nothaft recently shared his thoughts on the type of housing market we’ll see in 2011. He feels that fixed mortgage rates will remain below 5 percent next year, while the 5/1 ARM will remain below 4 percent. He also forecasts a rise in purchase loans and a decline in refis. Prediction made in December 2010
In an interview with Steve Bergsman from Inman News, Scott Sambucci said he expects home prices to fall another 7 – 9 percent in 2011. Mr. Sambucci is the director of business development at Altos Research, a company that provides data-analysis services to the real estate industry. Sambucci also writes many of the posts on the company’s ―How’s the Market‖ blog. -Prediction made in December 2010
In late November, Fannie Mae released its housing forecast for that month. The report also included a forecast for home sales through 2011 and beyond. When you compare their 2011 end-of-year predictions to actual sales numbers from the beginning of 2010, you basically have a flat line. This suggests another sluggish year for the housing market. -Prediction made in November 2010
Economic analysts from Standard and Poor’s have made the prediction that home prices will drop another 7 – 10 percent in 2011. Here again, the usual suspects are cited as being the cause for the potential declines — unemployment and inventory. S&P credit analyst Erkan Erturk said that the price declines at least seem to be slowing, when compared to the last two or three years. -Prediction made in November 2010
Betty Anne Burns, Broker, Realtor, Instructor & NABOR Award Winner (985) 630-1755 – 2011RealEstate@gmail.com Top Agent Realty, 1011 N. Causeway, Mandeville, LA 70471
Fiserv, an information-management company in the financial sector, recently revised its home-price projections for 2011. In February 2010, they were fairly optimistic about the housing market, predicting national price gains of about 4% through the end of 2011. Their latest prediction is for a 7.1% drop in prices through the summer of 2011. According to David Stiff, the chief economist at Fiserv: ―Some of the largest declines in prices will occur in markets that had strong spring and summer 2010 price increases.‖ -Prediction made in November 2010
Mark Zandi, the often-quoted chief economist from Moody’s Analytics, recently predicted another 8% drop in home prices through the third quarter of 2011. ―There’ll be no vicious, self-reinforcing spiral down,‖ he said. ―[But] more home price declines are coming.‖ If Zandi’s prediction holds true, it will signify a 34% drop in home values from the height of the housing bubble. -Prediction made in November 2010
On October 26, 2010, the Mortgage Bankers Association released its mortgage finance forecast for 2011. If their predictions are accurate, mortgage rates will slowly rise between now and the end of 2011. For example, consider the benchmark 30-year fixed-rate mortgage. The current average rate in this category (as of October 21, 2010) is 4.21 percent. The MBA is predicting that these rates will gradually rise through 2011, exceeding 5 percent by the end of that year. -Prediction made in October 2010
Nicolas Retsinas, the director of Harvard University’s Joint Center for Housing, recently discussed the future of the housing market on Bloomberg Television. Among other things, Mr. Retsinas said: ―I don’t suspect we’re going to see any increases in the mortgage rate in the near future. What I worry about is that when interest rates do finally turn, they may go up quickly.‖ -Prediction made in October 2010
On the Wall Street Journal website, Nick Timiraos wrote that many economists are revising their predictions about the housing market. The nowdefunct tax credit for first-time home buyers created a temporary burst of activity. This led to predictions for a housing bottom in 2010. But now, says Timiraos, ―some economists don’t see a recovery until late next year or early 2012.‖ -Prediction made in October 2010
On October 19, 2010, John Mauldin wrote an interesting post to his blog on Forbes.com. Mr. Mauldin revised an earlier prediction he made about nationwide housing bottoms — and not for the better. ―I wrote three years ago that it could be well into 2011 before we get to a bottom,‖ he said. ―That may have been Betty Anne Burns, Broker, Realtor, Instructor & NABOR Award Winner (985) 630-1755 – 2011RealEstate@gmail.com Top Agent Realty, 1011 N. Causeway, Mandeville, LA 70471
optimistic.‖ He agrees with Gary Shilling that home prices might fall another 20%, before we find a true bottom. -Prediction made in October 2010
In October 2010, Freddie Mac published an economic forecast that included various housing predictions. Among other things, the company feels that mortgage rates will stay below 5% for the next year or so (until the end of 2011). They are predicting that average rates on 30-year fixed mortgage loans will remain around 4.4 percent through the last quarter of 2010, rise to 4.5 percent during the first quarter of 2011, and inch upward toward 5.0 percent by the end of 2011. -Prediction made in October 2010
In October 2010, the National Association of Business Economics (NABE) released the results of a survey of economists. Among other things, the survey pointed toward a significant increase in housing starts in 2011. According to the report, home prices have already hit bottom in most of the U.S. But home price increases in 2011 will probably still fall short of inflation. -Prediction made in October 2010
Stan Humphries, chief economist at Zillow, believes that most real estate markets in the U.S. will hit bottom in the third quarter of 2010. He also believes that the bottom will be ―long and flat,‖ as opposed to a quick rebound. ―Think about it less in terms of a bottom than as second phase of the housing market,‖ he added. Prediction made in June 2010 Warren Buffett, one of the most successful investors in the United States, predicted that the real estate slump will be behind us by 2011. In his annual letter to shareholders of Berkshire Hathaway, Buffet wrote that ―Within a year or so, residential housing problems should largely be behind us.‖. -Prediction made in February 2010
An article in Time magazine pointed out that many housing-market experts believe prices will bottom out in 2010. But it may be 2013 before the market noticeably rebounds. That same article quoted David Goldberg, an analyst with UBS, who said: ―Some markets still have further [down] to go, but we’re definitely in the latter innings of the downturn.‖ -Prediction made in January 2010
Additional Market Forecasts are Forthcoming We will keep you updated as new market analysis becomes available. If we overlooked a housing market prediction that should be on this list, please let us know.
Betty Anne Burns, Broker, Realtor, Instructor & NABOR Award Winner (985) 630-1755 – 2011RealEstate@gmail.com Top Agent Realty, 1011 N. Causeway, Mandeville, LA 70471
Disclaimer: The housing market predictions listed above are provided ―as-is‖ with no warranties or guarantees of any kind. We have compiled this information for educational purposes only. We are making no predictions of our own regarding the economy.
Betty Anne Burns, Broker, Realtor, Instructor & NABOR Award Winner (985) 630-1755 – 2011RealEstate@gmail.com Top Agent Realty, 1011 N. Causeway, Mandeville, LA 70471