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The housing market has been growing at a consistent pace, but it will take another five years for it to emerge from the shadow of the Great Recession, according to experts surveyed by Zillow in its Home Price Expectations Survey.
The quarterly survey of more than 100 economists and real estate experts across the U.S. asked them to offer their expectations for growth in the U.S. Zillow Home Value Index over the next five years, as well as to offer their opinions on a series of supplemental questions related to the housing market.
The survey found that, according to the S&P/Case-Shiller U.S. National Home Price Index, home values grew at an average annual pace of 3.6 percent between 1987 and 1999. If home values had continued to grow at the same pace year-after-year, the median U.S. home would have been worth $214,500 at the end of 2017. However, as of December 2017, the median U.S. home was valued at $206,300 despite six years of an average annual home value growth of 5.3 percent during the recovery period after the Great Recession.
According to the survey panelists home values were expected to climb 4.8 percent in 2018, with annual appreciation slowing to 3.7 percent in 2019, and 2.7 percent by 2021, before accelerating to 2.8 percent annual growth by 2022.
Though the most pessimistic of them said they expected only 1.6 percent annual growth in the market, most respondents surveyed said that they expected the average annual growth rate at 3.4 percent over the next five years.
When asked how the recent passage of the new tax law impacted their overall outlook for U.S. home values over the next five years, 41 percent of panelists said their outlook was more pessimistic, compared to 31 percent who said their outlook was more optimistic.
The panelists said they expected bottom-third, entry-level home values to grow 6 percent in 2018, down from 8.5 percent annual growth currently but still double the expected pace of top-third annual home value growth, which is expected to be 3 percent in 2018, the survey found.
