Calling A Housing Bottom

How many people and groups have predicted “when” the bottom of the housing market since things started to go south in late 2007 and early 2008?  Countless.  Now Zillow is forecasting a bottom in housing prices by 2013. The June 2012 Zillow Home Price Expectations Survey takes data from an expert panel of over 100 leading economists and it is this group’s results which are leading the data today.

Zillow said, “For the first time, the individual economists surveyed were largely in agreement on the trajectory of home prices nationally, signaling that a true bottom may be imminent.”

The better part of the news is that the consensus now signals that home prices as an aggregate will decline only slightly in 2012.  The call is for a drop of only -0.4% for the entire year, and the prediction is that there will be a 2013 upswing of about 1.3%.

Zillow’s previous report was in March 2012, and economists then were calling for a drop of -0.7% in 2012 and a gain of 1.4% in 2013.  So, the gain is a tad less for 2013’s rate of change but it is above a slightly better base to make the overall gains better than expected.

What the broad measurements and targets fail to convey is that many housing markets are already on the upswing and that much of the flattening or improvements have been seen regionally already.  These are still way down from the peak, but now it seems that the bottom is happening when it is quality borrowers buying homes.  That in turn implies that even if things do not improve as expected across the entire nation that the next leg down would not be as painful as the previous drop.

JON C. OGG