The housing market in the United States is unlikely to show any signs of sustainable stability until at least 2016 and this is weighing heavily on the economy, which has been in recovery now for more than two years.
Home prices are expected to start to climb sometime in 2012 and in coming years.
According to economists in the most recent survey conducted by the Wall Street Journal, home prices are expected to start to climb sometime in 2012 and continue to do so for the coming years. However, these economists do not see home prices outpacing inflation anytime in the next three years. Essentially, that means that what most Americans have as their largest investment, their home, will not be able to keep up with the pace set by cost increases in other items that they spend money on such as food and clothing.
These same economists anticipate that home prices, as measured by the Federal Housing Finance Administration will show a decline of 2.7% for 2011. They do, however, expect an increase in home prices over 2012. While they anticipate a gradual recovery in increase in home prices over the conning years, they expect that inflation will be 3.3% at the end of 2011 and remain under 2.5% until 2014 or longer.
Out of the 54 economists surveyed by the Wall Street Journal, most anticipated economic expansion above 3% by the year 2014. That estimate is much faster than the 1.7% forecasted for 2011, but overall that figure is still slow. That means that while a stable housing market will aid in growth, at the current rate of recovery, it’s not likely to amount to much.
All of these estimates given by the economists are based on a housing market that has already bottomed out and will start to show signs of recovery and stability. Estimates given for new home construction in 2011 is expected to be level with 2010 at roughly 600,000 homes built and that number is only expected to increase to 720,000 in 2012. Even with the increase forecasted in building, actual recovery could still be years coming.
See also:
Home Prices Continue Downward Trajectory, But Optimism Shines
Home prices drift lower (Dec. 2012)
Is now the time to buy?
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