Experts Split on Housing Affordability Woes

Zillow

Published Jul. 8, 2014, 12:58 p.m. ET

By Nora Tooher

A panel of experts surveyed by Zillow were unable to agree on the cause of declining housing affordability, but did say they expect nationwide home values to end the year up 4.4 percent.

While low mortgage rates are keeping homes within reach of consumers across most of the country, affordability is becoming an issue within a number of markets, according to the survey.

On average, the panelists said they expect nationwide home value appreciation of 4.4 percent through the end of this year, to a Zillow Home Value Index of $176,380. Panelists said they expect home value appreciation to slow to 3.8 percent by the end of 2015, on average, and to 3.4 percent through 2016.

The panelists – 106 economists, real estate experts and investment and market strategists – were asked to identify the primary cause of declining affordability from a list of five choices. Responses that gained the largest support among those with an opinion were stagnant income growth (28 percent), abnormally high rates of home price and rent appreciation (27 percent) and an abnormally low supply of homes currently available for sale or rent (21 percent). Many also pointed to a generally insufficient number of homes (13 percent) and tight credit (11 percent).

"Given all of the distortions currently affecting the housing market, one could probably make the case that things could, and maybe should, be a lot worse. We're certainly in a better spot than we were just a couple years ago, but the housing market remains far from anyone's definition of 'normal," Zillow Chief Economist Dr. Stan Humphries said in a statement.

Zillow's Home Value Index – the median valuation for an area, including single-family homes, condominiums and cooperatives –has declined in Philadelphia -1.0 percent over the past year and Zillow predicts values will fall -0.8 percent within the next year.

Compared to residents in the nation overall, Philadelphia metro residents are slightly less likely to have high confidence about their housing circumstances, according to a separate consumer survey conducted by Zillow. The only major metros with lower confidence about overall housing confidence are Detroit and St. Louis. San Jose, Miami and San Diego topped the list for housing confidence.

The survey also found that 7 percent of Philadelphia households plan to buy a home in the next year.

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