Experts even more optimistic on National and Chicago area home prices

The outlook for house prices has gotten brighter than me
thought possible

Zillow and Pulsenomics released their Q2 2021 Home Price Expectations Survey a few weeks ago, just 2 months after posting their Q1 survey. This first quarter survey was already quite optimistic, but these real estate experts have just provided an even more optimistic outlook. If you compare the graph below to the previous one, you’ll see that they are now forecasting 8.7% growth for home prices nationwide in 2021 compared to 6.2% last quarter. According to the press release which is “the highest since the launch of the quarterly survey in 2010 ″.

The cumulative 5-year forecast is now 26.7%, which equates to 4.8% per compound year. This compares to 23.4% last quarter. Most of that difference is in 2021.

house price forecast

Real Estate Experts’ Home Price Growth Predictions Highest Ever

So what is going on? Demand is still strong coming out of the pandemic and supply is still limited by weak new home construction and the reluctance of existing homeowners to move during the pandemic. Terry lobs, founder of Pulsenomics, addressed two of these factors:

A profound shift in housing preferences, the adoption of remote employment, low mortgage rates and the economic recovery continue to fuel demand in the single-family home market and push up prices. Strict zoning regulations, an acute labor shortage, and record material costs are limiting new construction, exacerbating the imbalance, and raising expectations that above-normal home price growth rates will persist in the past. beyond the short term.

As part of a follow-up survey, panelists were asked what they thought was restricting new construction and what could be done to encourage more of it. Interestingly, they mostly blamed the market factors (costs, labor shortage, etc.) It seems pretty inconsistent to me.

As usual, I turn to John Dolan, the market maker for Case Shiller Home Price Futures, for a semblance of where Chicago-area home prices might be heading. He was kind enough to provide me with the latest data and the graph below. Note that the contract months shown are for February, which matches data for the 3 months ending in December of the previous year. So this happens until the end of 2025.

At least the chart is pointing up now. Before the pandemic, this was not true. It was a bit flat. From the end of 2020, the cumulative appreciation now stands at 15.9%, which is obviously much lower than the outlook for the nation mentioned above. Sad. And that equates to 3.0% per year. These numbers are almost negligible better than they were the last time I checked them.

Chicago Home Price Forecasts

The outlook for house prices in Chicago has also improved, although it is not as optimistic as it is for the nation.

#RealEstate #ChicagoRealEstate #Pandemic #HomePrices

Gary Lucido is the president of lucid real estate, the full-service Chicago-area real estate brokerage service that offers homebuyer’s discounts and rebate commissions. If you want to stay on top of the Chicago real estate market or get an insider’s perspective on the real estate industry’s undercuts, you can subscribe to Getting Real by email using the form below. Make sure to verify your email address when you receive the verification notice.

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