New Observations Quarterly Forecast of Property Values Estimates a Loss This Year of 13 Percent

The New Observations quarterly forecast of property values estimates a loss in values this year of 13 percent – a slight uptick from the 12% loss forecast at the beginning of the year.

The average of four major nationwide indexes measuring prices also continues to suggest we hover right around a middle point of the total loss expected. Our current loss by the average of four indexes from the peak in 2006/2007 is 20 percent. The total loss forecast by the blend of indexes is 33 percent.

The losses for this year projected in the four indexes vary widely and range between 3 percent and 24 percent. The indexes predicting large losses this year are biased by quicker and deeper losses which they registered following the peak. The variance between the indexes is demonstrated by a tally of current losses: It is only nine percent according to the Federal Housing Finance Agency (FHFA), but it is 30 percent at Case Shiller.

A chart of all four data sets follows.

PRINT new observations forecast of property values

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Michael David White is a mortgage broker in Chicago.