Predictions Of Home Prices For 2016 And Beyond

Peoples Home equity shares a recent Mortgage News Daily report highlighting the Bank of America Merrill Lynch home price predictions dating out to 2022.

  • Share on TwitterShare on FacebookShare on Google+Share on LinkedInEmail a friend
By the time 2016 comes around the positive effects of low unemployment and building credit history may perfectly coincide with falling home prices

Chicago, IL (PRWEB) July 22, 2014

Analysts at lending institutions like Peoples Home Equity are always making predictions about the future of the housing market based on the most current data. In this piece, we turn to the prediction of a different lender, the two tier lending institution, Bank of America Merrill Lynch (BAML). According to a MortgageNewsDaily.com July 21 release titled "Home Prices to Level Off and Reverse Course Within 2 Years - Analysts", BAML analysts believe home prices will set a peak by mid-2016. This price trajectory is based on the expectation of the Federal Reserve to raise short terms interest rates relatively more than long term rates. The S&P/ Case-Schiller Home Price Index (HPI) is expected to increase up to 155.5 by the end of 2014, and to 167.3 by the end of 2016 the peak year. Once at their 2016 peak home prices are then predicted to fall and not return to this 2016 peak until 2022. According to these analysts the housing market will enter a growth rate of 3 percent over the next 30 months which is much more stable than the 11 percent growth we’ve seen in 2013 and 9.5 percent growth in 2011. The results showed that the growth rate from this year until 2022 will average about 1.0 percent.

Case Shiller’s Housing Price Index has been volatile over the past few years. Initially the index was over-valued by 9.7 percent in the first quarter of 2014 rising from a bottom of being -6.2 percent under-valued in 2011. Bank Of America Merrill Lynch predicts that home prices will be 12 overvalues by late 2015 early 16 which leads to a predicted retracement to at least fair value in 2016. No major interest rates changes are expected over this period.

If in fact, the housing market experiecnes a steady and stable recovery from 2016 to 2022 with low home price growth, first-time home buyers would have a good chance of purchasing a property. Peoples Home Equity believes Americans still need to put a couple years of credit history under their belt before being able to purchase a home. By the time 2016 comes around the positive effects of low unemployment and building credit history may perfectly coincide with falling home prices to create a perfect buying opportunity for first-time home buyers.

For prospective home buyers that are interested in purchasing a property now, consider obtaining a mortgage from Peoples Home Equity. Contact a Peoples Home Equity loan officer today at: 262-563-4026