A few readers were questioning why I didn’t write up a full post last month on Moody’s forecast that U.S. home prices will rise 7.2% between today and 2014, with prices in Seattle rising 26% and Bremerton shooting up a whopping 45%.
Here’s a brief excerpt from the August 3rd Bloomberg article about the forecast:
At some point, everything stops falling. Sometimes things hit bottom with a bone-crunching thud and just lie there in a heap. Sometimes they bounce back up at least part of the way. The U.S. housing market is in the latter camp.
…the forecast in numerous regions across the country is for a healthy recovery by 2014.
While four years may seem too distant to offer many U.S. homeowners much reassurance, the outlook could be worse. Taking into consideration such factors as employment, foreclosure rates, income growth, demographic trends, and construction costs, Moody’s Economy.com and Brookfield (Wisc.)-based financial services industry information firm Fiserv (FISV) estimate that by 2014, U.S. home prices will be 7.2 percent above 2010 levels, with the strongest growth in the Pacific Northwest.
Now here’s an excerpt from an article Bloomberg ran two days ago on September 15th about another Moody’s forecast:
The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.
Shadow inventory — the supply of homes in default or foreclosure that may be offered for sale — is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc.
And that is why I pretty much completely ignore any “forecasts” from Moody’s these days. Which one is it, are home prices going to rise an average of seven percent in four years, or are they going to continue to slide for another three years?
If you’re looking to read the random output of a drunken monkey making out with an iPad, feel free to indulge in Moody’s “forecasts,” but if you’re hoping to find any actual insights into the market, I suggest you look elsewhere.