From the WSJ:
Many housing analysts underestimated the severity of the home price crash when the downturn began seven years ago. Now, many are racing to keep up with the current rebound.
At the start of the year, the conventional wisdom went something like this: home prices rose so much last year, they will probably have to cool down a bit in 2013. But the first three months of the year have shown the conditions that produced last year’s gains are just as strong — if not stronger — than last year.
The S&P/Case-Shiller index on Tuesday reported prices in January were up 8.1% from one year ago, up from a 6.8% annual gain in December.
Two analysts who have stayed ahead of the pack are among those upgrading their forecasts for 2013. Ivy Zelman, chief executive of research firm Zelman & Associates, said Wednesday she was now expecting prices to rise by 7% this year, up from earlier estimates of 6%, 5%, and 3%. Zelman was one of the first analysts to identify the turnaround in late 2011 and produced some of the most accurate housing forecasts last year.
She’s also calling for a 5% gain next year because she says the supply shortages and growing demand that fueled last year’s turnaround show no signs of easing. “The shortage of housing capacity continues to resonate,” Zelman said in a research note on Wednesday. “Just as deflation was a national headwind that stretched deeper into the economy than anyone would have imagined, we believe that appreciation can carry broad, positive implications for the consumer and economy beyond many expectations.”
John Burns, who runs a real-estate consulting firm in Irvine, Calif., is calling for a 9% gain in home prices this year, up from a 5% forecast late last year. The reason: strong investor demand and low interest rates that have boosted the purchasing power of buyers. Burns had similarly turned bullish on housing early last year.
A quarterly survey of more than 100 economists and housing forecasters last found that all but two expect prices to rise this year, with the average forecast of a 4.6% gain. Among those who have revised up their forecasts in the last month are analysts at Morgan Stanley, Bank of America, Capital Economics and J.P. Morgan, which have taken their forecasts to 6-8%, from earlier predictions of 3-6%.