While pundits are predicting an "uneven" housing market recovery with the median housing price reaching 2006 levels nationally by 2018, they are almost certainly wrong. There is too much uncertainty to predict anything out to 2018. Whether it is the yet unknown impact of current loose monetary policy, an increasingly unstable international outlook or even an increasingly unstable and divided electorate, something big is likely to happen between now and 2018, maybe even something good, that will render current estimates inaccurate.
That doesn't mean that the latest study from the Demand Institute, a nonprofit think tank operated by The Conference Board and Nielsen doesn't have value. Understanding their analysis and projection of today's market trends does lend insight to which markets will do better, or worse, than others and why.
According to the study, of the 50 largest metropolitan areas that are likely to see housing price appreciation for the next 6 years, the top 5 markets will see price increases of 32% and the bottom five will only average an 11% gain.
The Demand Institute expects the largest gains to occur in Memphis, Tampa, Jacksonville, Milwaukee and St. Louis while the smallest increases will be seen in Washington, D.C., Oklahoma City, Denver, Minneapolis and Phoenix.
On a state by state basis, New Mexico, Mississippi, Maine, Illinois and New Hampshire are predicted to have the largest gains while Minnesota, Virginia, New York and Alaska are predicted to have the most tame price appreciation.
The states that will take longest to reach their peak levels from 2006 are the same areas that had the biggest price increases prior to the bubble according to the study. Those areas experienced the biggest drops after the bubble burst. Communities in Nevada, Arizona, California and Florida experienced outsized proportions of foreclosures and vacancies.
The study expects prices in Nevada to still be below their 2006 peak by 45% in 2018, or at about their 2002 level. Nevada saw a huge boom, only to have prices plunge by 60% after 2006.
The rapid, over 11%, price appreciation of 2013 is not expected to be repeated either. Instead, prices are expected to grow at an annual rate of 2.1% between 2015 and 2018 as supply and demand equalize.
The study sees formation of new households as the driver for demand for housing while improving employment and a stronger economy allow the purchases of homes.
For a market to have high price appreciation, it needs to have high demand for new household formation and a strong economy driving it.
But the study is nothing more than a scenario of what could be. It makes no allowances for another recession, or even changes in policy that could more rapidly strengthen the economy. The study cannot include the potential impacts of a meltdown in the Middle East, Europe, or somewhere closer even closer to home.
If you are looking at selling your home, I would consider this scenario as most likely a "best case" scenario. It tells me that we saw rapid price appreciation in 2013, and will moderating but yet strong demand this season. After that, price increases will dwindle as demand softens and supply increases.
Looking at all of that, there doesn't seem to be a better season to sell your home than the selling season of 2014. And, that's if nothing untoward happens in the next few months. If anything majorly bad happens in the next few years, housing could be hit hard again. When I consider the risks, if you have a home to sell, there is no better time than this year. There is no better person to help you get your Lake Chelan home sold than someone who understands the urgency and has the skills.