People always seem to be asking me where the real estate market is headed. I am no expert, but a recent Pulsenomics survery of 100 economists, real estate experts and and investment & market strategists nationwide about where home prices are headed over the next 5 years yielded these projections.
- Nationwide values will appreciate by 4.5% in 2014
- Cumulative appreciation based on an average including both bulls and bears will be 19.7% by 2018
- Even the most conservative experts are projecting a cumulative appreciation of almost 11% by 2018
It helps put projections into perspective by looking back as well.
- Pre-Bubble years 1987-1999 – national prices grew 3.6% annually
- Bubble, Jan 2000-Apr 2007 – annual national price growth was 7.0%
- Bust, May 2007 – Jan 2012 – prices dropped an average of –5.2% each year
- Recovery, Feb 2012-Dec 2013 – annual national price growth was 4.7%
As you can see in the graph below, price growth and decline in the Twin Cities was a little over that nationally… so it can be expected that prices over the next 5 years will likely also be a little ahead of the national average. Some local pundits have predicted price gains of 4%-6% this year, others in the 7%-9% range. Both could be right, because price appreciation can vary greatly by neighborhood.
Bottom line is, price growth is expected to slow down compared to the last couple years but hold fairly steady… good for long-term stability because continued double digit price gains would be unsustainable, just as they were during the Bubble years.