Archive: 2013 Housing Market Predictions & Forecasts

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Update: A new version of this story was published in October 2013 and includes predictions for the U.S. housing market in 2014. The story below has been retained as a historical archive.

Welcome to the housing predictions library, brought to you by the Home Buying Institute. On this page, you’ll find the world’s largest collection of real estate forecasts and predictions for 2013 and beyond. This page is updated often, as new information and insight becomes available.

Outlook for 2013: Expert Quotes and Commentary

The housing predictions below have been organized in reverse-chronological order. You’ll find the most recent commentary at the top of the page.

  • JPMorgan ChaseJPMorgan Chase, the second-largest mortgage lender in the United States, recently predicted that U.S. home prices would rise by 3.4% in 2013. That was on the low end. In a more bullish scenario, they said prices could rise by as much as 9.7%. This was originally reported by Al Yoon at the Wall Street Journal. –Prediction made in December 2012
  • freddieOn December 6, the economists at Freddie Mac released their U.S. Economic and Housing Market Outlook report for 2013. They zeroed in on mortgage rates and home prices in particular. They expect loan rates to remain near historic lows for the first half of 2013, and to rise gradually beyond that. The average rate for a 30-year fixed mortgage will likely remain below 4% for the entire year, according to their forecast. Meanwhile U.S. home prices could rise by 2% to 3% over the next 12 months. –Prediction made in December 2012
  • zillowStan Humphries, the chief economist at Zillow, is no stranger to this list. He often shares his outlook on housing-related conditions. Here’s his latest forecast: U.S. house prices will rise 1.7% over the next twelve months. Of course, this is an averaged forecast for the entire country. Some metro-level markets, like those in California, will likely see much higher appreciation. –Prediction made in October 2012
  • forbesBill Conerly, an economist and writer for Forbes, expects to see moderate improvements in the U.S. housing market through 2013. This tracks closely with our own outlook. But he is quick to point out that many homeowners are still underwater, meaning they owe more on their mortgages than their homes are currently worth. Over the past year, housing demand has outgrown construction, Conerly points out. This will continue to drive prices upward through 2013.  –Prediction made in October 2012

Archive: Housing Predictions for 2012

  • S&P IndexOn January 31, 2012, the monthly Case-Shiller / S&P Home Price Index was released. With evidence of a price decline in most metro areas, it put a damper on some of the new-year optimism we have been seeing. Unlike a lot of folks, Karl Case does not feel that the housing market is fully on the road to recovery. Shortly after the report came out, he did an interview with Tom Keene on Bloomberg’s “Surveillance” radio show. He said the “seeds of the recovery were being planted,” but there was still a rocky road ahead of us. –Prediction made in January 2012
  • zillowDr. Stan Humphries from the real estate information service Zillow anticipates additional price declines in 2012, followed by a long period where prices will remain flat. He calls it a “transitional year,” suggesting the worst may be behind us. He tempers his optimism with the reality that supply and demand is still imbalanced in many housing markets across the country, largely due to foreclosures. –Prediction made in January 2012
  • Schwab LogoLiz Ann Sonders, the chief investment strategist with investing firm Charles Schwab, expects the U.S. housing market to hit bottom in 2012. And since housing has been one of the most persistent drags on the economy, any improvement in this sector could give a moderate boost to the economy as a whole. –Prediction made in January 2012
  • PIMCONationally speaking, U.S. home prices may drop another 6% – 8% before they hit bottom. This forecast comes from Scott Simon, head of the mortgage-backed securities team at Pacific Investment Management Company (PIMCO). One of the biggest problems, according to Simon, is that current government policy has made it harder to obtain government-backed mortgages such as the FHA loan. He also said the banks are being too tight with credit, a complaint that seems to be coming from many sources these days.  –Prediction made in November 2011
  • Federal ReserveThe Federal Reserve is taking certain actions to keep mortgage rates low through 2012. One of their efforts (a new program known as “Operation Twist”) involves continued investment in long-term government bonds. According to the Fed’s policy statement: “This program should put downward pressure on longer-term interest rates.” Translation: There is a good chance we could continue to see low mortgage rates in 2012, as we have seen through most of 2011.
  • Clear CapitalClear Capital, a company that provides property-value data to mortgage companies, feels that housing prices could decline by another 3.2% through the first quarter of 2012. According to Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital, the housing market lacks the fundamentals needed to stabilize prices. Mortgage rates are low and affordability is high. But jobless rates and consumer uncertainty will reduce the likelihood of price gains. –Prediction made in October 2011
  • freddieFrank Nothaft, chief economist for the government-backed mortgage giant Freddie Mac, forecasts that home prices in most of the U.S. will hit bottom in early 2012. He also expects home sales to rise by 5% next year, compared to 2011. He doesn’t expect a significant rise in prices, though — more like a long, flat bottom. Unemployment, uncertainty and excess inventory will continue to put downward pressure on home prices throughout 2012. –Prediction made in October 2011
  • Merril LynchEthan Harris, an economist and author who works for Merrill Lynch, doesn’t expect much growth in the housing sector in 2012. In fact, he doesn’t anticipate any significant growth in that area until 2013, at the earliest. He shared these thoughts during an interview on Bloomberg Television. According to Bloomberg, Harris is one of the most accurate forecasters on the economy. Harris pointed to unemployment, which is still hovering above 9%, as one of the biggest problems for the housing market. –Prediction made in September 2011
  • RBC Capital MarketsDuring an interview with Bloomberg Television, housing analyst Robert Wetenhall predicted that home prices could fall by 5% – 15% in 2012. Wetenhall works for RBC Capital Markets, an investment banking firm headquartered in Canada. Like many people, Wetenhall, points to foreclosure inventories as one of the biggest problems for the housing market in 2012 and beyond. He referred to it as a “multi-year” problem. He added that without a housing solution, we will not have a broader economic solution. –Prediction made in September 2011
  • MacroMarkets LLCOn September 21, 2011, MacroMarkets LLC published the results of its home price expectations survey for that month. The survey is sent to 111 economists, investment analysts and housing experts. The September survey showed that most of the respondents had a pessimistic outlook regarding home prices. According to the survey, most of the experts predict that home prices will only rise by 1.1% through 2015. Thus, their price expectations for 2012 are mostly flat. –Prediction made in September 2011
  • Mortgage Bankers AssociationOn September 12, 2011, the Mortgage Bankers Association (MBA) said they do not expect any major improvements in the U.S. economy over the next year and a half. They expect to see mortgage rates of around 4.5% for much of next year. The group anticipates a rise in home-buying activity in 2012, as well. Their mortgage-rate predictions reflect many of the other forecasts we have seen in our research — most people expect rates to stay low through the first part of 2012. –Prediction made in September 2011
  • Politico LogoJosh Boak, an economics reporter for Politico, feels that the housing market won’t see any significant recovery for several more years. At least, that’s what he wrote in a feature story about the challenges President Obama faces in 2012. To be more accurate, Mr. Boak (a former reporter for the Chicago Tribune) was summarizing remarks made by former Fed chairman Alan Greenspan. Mr. Boak rightfully points out that low mortgage rates have not been enough to spur the ailing housing market. –Prediction made in September 2011

Archive: Forecasts Made for 2011

  • Mortgage Bankers AssociationOn January 26, 2011, the Mortgage Bankers Association (MBA) said they expect the average interest rate on 30-year fixed-rate mortgages to reach 5.3 percent later this year. In 2010, the average rate in this category was 4.7 percent. The MBA also said the number of refinance loans could drop by as much as 66 percent. Home purchase loans on the other hand are expected to rise in 2011, albeit slightly. –Prediction made in January 2011
  • RealtyTrac LogoRick Sharga of RealtyTrac has appeared on the housing predict-o-meter before. Now he’s back with another grim forecast. Mr. Sharga and the folks at RealtyTrac expect the number of U.S. homes receiving a foreclosure filing will climb by about 20 percent in 2011. This is staggering, when you consider the number of foreclosures over last year. He also feels that foreclosures will peak in 2011. –Prediction made in January 2010
  • University of ChicagoCasey Mulligan, an economics professor at the University of Chicago, disagrees with the rising number of analysts who are predicting a double-dip in home prices for 2011: “Predicting the future is difficult, but the … data so far do not seem to suggest that home values will be significantly different this year [in 2011] than they were in 2010.” –Prediction made in January 2011
  • Wells Fargo logoAccording to Mark Vitner, a senior economist at Wells Fargo Securities: “Housing is going to remain dead in the water through the middle of [2011] … As foreclosures come back on the market, that will put downward pressure on prices.” Foreclosures “coming back” is a reference to the current slowdown in foreclosure processing, which began with the robo-signing scandal. –Prediction made in December 2010
  • Federal ReserveOn December 14, 2010, members of a Federal Reserve committee met to discuss the current and future state of the economy. According to the minutes from that meeting, the committee feels the U.S. housing market will weaken further in 2011. Low demand and high inventory were cited as the primary causes. Some participants noted that the “overhang of foreclosed homes” would contribute to further price declines in many areas. –Prediction made in December 2010
  • On December 8, 2010, Oliver Chang and other financial analysts from Morgan Stanley released a report with their thoughts on the housing market. According to the report, the analysts expect home prices in the U.S. to fall as much as 11 percent by 2012. The reasons cited? Supply and demand, of course. “We see the trough occurring in 2012 instead of our previous call of 2011,” said Chang. –Prediction made in December 2010
  • Trulia LogoPete Flint, chief executive of, feels that rising mortgage rates will reduce housing demand in 2011. “Nationally, prices will decline between 5 percent and 7 percent,” Flint said, “with most of the decline occurring in the first half of next year [2001].” –Prediction made in December 2010
  • RealtyTrac LogoRick Sharga, Senior VP of the foreclosure-tracking company RealtyTrac, sees a rise in the number of pre-foreclosure homes over the next few months. He predicts that many of these homeowners will simply walk away from their homes. “Even with today’s low interest rates,” Sharga said, “you’re looking at an average of $1,000 or more in mortgage payments on loans that are overvalued by about 30 percent. That is where you will see a high level of walkaways.” –Prediction made in December 2010
  • freddieFreddie Mac appeared on our housing market predict-o-meter back in October. Here’s another set of predictions, this time from their chief economist Frank Nothaft. This commentary comes from the Freddie Mac blog, where Mr. Nothaft recently shared his thoughts on the type of housing market we’ll see in 2011. He feels that fixed mortgage rates will remain below 5 percent next year, while the 5/1 ARM will remain below 4 percent. He also forecasts a rise in purchase loans and a decline in refis. –Prediction made in December 2010
  • In an interview with Steve Bergsman from Inman News, Scott Sambucci said he expects home prices to fall another 7 – 9 percent in 2011. Mr. Sambucci is the director of business development at Altos Research, a company that provides data-analysis services to the real estate industry. Sambucci also writes many of the posts on the company’s “How’s the Market” blog. –Prediction made in December 2010
  • Fannie MaeIn late November, Fannie Mae released its housing forecast for that month. The report also included a forecast for home sales through 2011 and beyond. When you compare their 2011 end-of-year predictions to actual sales numbers from the beginning of 2010, you basically have a flat line. This suggests another sluggish year for the housing market. –Prediction made in November 2010
  • Economic analysts from Standard and Poor’s have made the prediction that home prices will drop another 7 – 10 percent in 2011. Here again, the usual suspects are cited as being the cause for the potential declines — unemployment and inventory. S&P credit analyst Erkan Erturk said that the price declines at least seem to be slowing, when compared to the last two or three years. –Prediction made in November 2010
  • fiservFiserv, an information-management company in the financial sector, recently revised its home-price projections for 2011. In February 2010, they were fairly optimistic about the housing market, predicting national price gains of about 4% through the end of 2011. Their latest prediction is for a 7.1% drop in prices through the summer of 2011. According to David Stiff, the chief economist at Fiserv: “Some of the largest declines in prices will occur in markets that had strong spring and summer 2010 price increases.” –Prediction made in November 2010
  • Moody's AnalyticsMark Zandi, the often-quoted chief economist from Moody’s Analytics, recently predicted another 8% drop in home prices through the third quarter of 2011. “There’ll be no vicious, self-reinforcing spiral down,” he said. “[But] more home price declines are coming.” If Zandi’s prediction holds true, it will signify a 34% drop in home values from the height of the housing bubble. –Prediction made in November 2010
  • Mortgage Bankers AssociationOn October 26, 2010, the Mortgage Bankers Association released its mortgage finance forecast for 2011. If their predictions are accurate, mortgage rates will slowly rise between now and the end of 2011. For example, consider the benchmark 30-year fixed-rate mortgage. The current average rate in this category (as of October 21, 2010) is 4.21 percent. The MBA is predicting that these rates will gradually rise through 2011, exceeding 5 percent by the end of that year. –Prediction made in October 2010
  • BloombergNicolas Retsinas, the director of Harvard University’s Joint Center for Housing, recently discussed the future of the housing market on Bloomberg Television. Among other things, Mr. Retsinas said: “I don’t suspect we’re going to see any increases in the mortgage rate in the near future. What I worry about is that when interest rates do finally turn, they may go up quickly.” –Prediction made in October 2010
  • Wall Street JournalOn the Wall Street Journal website, Nick Timiraos wrote that many economists are revising their predictions about the housing market. The now-defunct tax credit for first-time home buyers created a temporary burst of activity. This led to predictions for a housing bottom in 2010. But now, says Timiraos, “some economists don’t see a recovery until late next year or early 2012.” –Prediction made in October 2010
  • forbesOn October 19, 2010, John Mauldin wrote an interesting post to his blog on Mr. Mauldin revised an earlier prediction he made about nationwide housing bottoms — and not for the better. “I wrote three years ago that it could be well into 2011 before we get to a bottom,” he said. “That may have been optimistic.” He agrees with Gary Shilling that home prices might fall another 20%, before we find a true bottom. –Prediction made in October 2010
  • freddieIn October 2010, Freddie Mac published an economic forecast that included various housing predictions. Among other things, the company feels that mortgage rates will stay below 5% for the next year or so (until the end of 2011). They are predicting that average rates on 30-year fixed mortgage loans will remain around 4.4 percent through the last quarter of 2010, rise to 4.5 percent during the first quarter of 2011, and inch upward toward 5.0 percent by the end of 2011.  –Prediction made in October 2010
  • nabeIn October 2010, the National Association of Business Economics (NABE) released the results of a survey of economists. Among other things, the survey pointed toward a significant increase in housing starts in 2011. According to the report, home prices have already hit bottom in most of the U.S. But home price increases in 2011 will probably still fall short of inflation. –Prediction made in October 2010
  • zillowStan Humphries, chief economist at Zillow, believes that most real estate markets in the U.S. will hit bottom in the third quarter of 2010. He also believes that the bottom will be “long and flat,” as opposed to a quick rebound. “Think about it less in terms of a bottom than as second phase of the housing market,” he added. –Prediction made in June 2010
  • berkshireWarren Buffett, one of the most successful investors in the United States, predicted that the real estate slump will be behind us by 2011. In his annual letter to shareholders of Berkshire Hathaway, Buffet wrote that “Within a year or so, residential housing problems should largely be behind us.”. –Prediction made in February 2010
  • timeAn article in Time magazine pointed out that many housing-market experts believe prices will bottom out in 2010. But it may be 2013 before the market noticeably rebounds. That same article quoted David Goldberg, an analyst with UBS, who said: “Some markets still have further [down] to go, but we’re definitely in the latter innings of the downturn.” –Prediction made in January 2010

Disclaimer: The housing market predictions listed above are provided “as-is” with no warranties or guarantees of any kind. We have compiled this information for educational purposes only. We are making no predictions of our own regarding the economy.