Luxury Housing Market Quickly on the Mend According to Economists

September 25, 2012

We have seen a dramatic increase in the purchasing of luxury oceanfront condos in Miami and Palm Beach over the past year, which led us to believe that the housing market was recovering. After the housing market crash in 2008 and the economy was so uncertain people were less likely to spend money the way they once were. There was a lot of fear concerning the real estate market. Many wondered if they would ever see a profit from the purchase of a luxury waterfront home, or if the price of the home would actually go down.

Everything changed this year. Luxury waterfront homes and condos are selling to the point where there is hardly any inventory left. Investors from Europe, South America and this country have been buying up what’s left of the luxury real estate because they realize that prices are still very low and homes on the ocean will be worth a lot more in five to ten years.

According to a recent survey of more than 100 economists, real estate experts and investment strategists we will see steady increases in home prices through 2016. The survey was put together for valuation and portal Zillow, and conducted by Pulsenomics LLC, a research and consulting firm. There were 113 participants and they were asked to project the path of the S&P/Case-Shiller U.S. National Home Price Index.

They predicted that home prices will rise continually over the next several years to the tune of 2.3 percent in 2012 from the fourth-quarter of 2011, and continue to 4.7 percent in 2013, 8 percent in 2014, 11.4 percent in 2015 and 15.2 percent in 2016. This would be an annual growth of 2.9 percent between 2012 and 2016. In the pre-bubble days we experienced 3.6 percent annual growth between 1987 and 1999. It looks like we are headed back to a healthy housing market.

"This is further evidence that we're seeing a true recovery in the housing market," said Stan Humphries, Zillow's chief economist, in a statement.

"Not since mid-2010 -- in the midst of the homebuyer tax credits -- have we seen this group so bullish on housing. It's refreshing to see this optimism at a time when the market seems to be making an organic recovery, in the absence of an artificial stimulant like the tax credits."