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Forecast: Rents to Rise until 2017

Rent increases aren’t likely to ease up for at least two years, according to the latest Zillow® Home Price Expectations Survey of 101 economists and experts conducted quarterly by Pulsenomics LLC.

 Survey respondents were asked “How much longer to you expect rental affordability to continue deteriorating?” Of those with an opinion, 5 percent said less than one year, 33 percent said 1-2 years, 31 percent said 2-3 years, 11 percent said 3-4 years, 1 percent said 4-5 years, and 8 percent said more than five years. 11 percent were not sure.

Solving the rental affordability crisis in this country will require a lot of innovative thinking and hard work, and that has to start at the local level, not the federal level,” said Zillow Chief Economist Dr. Stan Humphries. “Housing markets in general and rental dynamics in particular are uniquely local and demand local, market-driven policies. Uncle Sam can certainly do a lot, but I worry we”ve become too accustomed to automatically seeking federal assistance for housing issues big and small, instead of trusting markets to correct themselves and without waiting to see the impact of decisions made at a local level. Broader federal casino spiele efforts aimed at increasing real wages and job opportunities will go a long way toward helping renters, but real, lasting solutions to rising rents need to be found locally.”

Markets Will Address Affordability

For today”s tenants who aspire to own a home, rising rent payments have been making it more difficult to save for a down payment and become tomorrow”s home buyers. Which of the following choices best reflects your view?” Of survey respondents with an opinion, 52 percent said markets would address this problem. Three percent said it requires government intervention, and 35 percent said it is not a problem.

On President Obama”s announcement last month aimed at helping middle-class homebuyers through a reduction in FHA mortgage insurance premiums, two-thirds (66 percent) of survey respondents with an opinion said they think the changes will be “somewhat effective in making homeownership more accessible and affordable,” but almost half (49 percent) said the new initiatives are unwise, unnecessary and potentially risky for taxpayers.

Home Values to Rise 4.4 Percent

The panelists predicted U.S. home values will rise 4.4 percent in 2015, to a median value of $187,040. The most optimistic forecasted a 5.5 percent increase, while the least optimistic projected a 3.1 percent increase. On average, panelists said they expect median U.S. home values to exceed their pre-recession peak of$196,400 by May 2017.

“During the past year, expectations for annual home value appreciation over the long run have remained flat, despite lower mortgage rates,” said Terry Loebs, Founder of Pulsenomics. “Regarding the near-term outlook, there is a clear consensus among the experts that the positive momentum in U.S. home prices will continue to slow this year.  At 4.4 percent, overall expectations for nationwide home value growth in 2015 are one-third lower than the actual 6.6 percent appreciation rate recorded last year.”


This edition of the Zillow Home Price Expectations Survey surveyed 101 experts between Jan. 20 and Jan. 29. The survey was conducted by Pulsenomics LLC on behalf of Zillow, Inc.


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