Housing prices will remain depressed for the next several years and may get even worse, according to a just-released survey of economists, analysts, investors and housing experts. The survey was conducted by MacroMarkets, a firm founded by Yale University professor Robert Shiller.
The study found that although some local real estate markets are stable or strong, more broadly, fundamentals in the U.S. housing market remain very weak despite record-low interest rates. The MacroMarkets home price expectations survey said that home prices will grow at a mere 1.1%, on average, through 2015. “Expectations for home price performance in 2011 have become somewhat less negative,” Shiller said. “Unfortunately, the average projection is somewhat more negative for each of the following four years.”
The survey polled a diverse group of 111 of economists, real estate experts, investment and market strategists. Not all were in agreement about what should be done — if anything — to correct the market. Almost three-quarters (73%) of the respondents think that further policy action is “highly likely” or “likely,” while more than half (57%) said such action is undesirable, and almost half (49%) said additional government action is unnecessary.
“This data suggests that regardless of when and how housing recovers, controversy will persist regarding the role of government in the market,” said Terry Loebs, founder of Pulsenomics, the firm that conducts the survey for MacroMarkets. “More than half of panel members who indicated that more policy action is desirable or necessary suggested specific measures the government might focus on,” Loebs said. “We received a variety of constructive proposals. Several panelists clearly want or expect the government to be a catalyst for more effective mortgage refinancing and modification initiatives, as well as rental and other home equity conversion programs.”