Expectations for Home Values Fading

Data from the latest installment of The Zillow Home Price Expectations Survey indicate that most of the 104 expert respondents foresee further moderation in the rate of U.S. home value appreciation beyond 2016.

  • The outlook for 2016 U.S. home price appreciation is 3.7 percent, less than the 4 percent value increase realized in 2015.

  • The five-year average annual rate of home value appreciation expected by the panelists is stuck at 3.3 percent, its lowest level since 2012.
  • Only the most optimistic group of experts believes that home prices will continue to keep pace with the 4.5% average annual rate recorded over the past four years of the housing recovery.

These subdued expectations are remarkable in light of the improvement in headline unemployment numbers, recent evidence of real income growth, stubbornly low home inventory levels, and very low mortgage rates that seem unlikely to spike anytime soon.

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