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118 Experts Predict Annual Home Value Growth To Exceed Pre-Bubble Rates Over Next Five Years

SEATTLE, March 18, 2013 /PRNewswire/ -- A nationwide panel of more than 100 professional forecasters expects home values to end 2013 up an average of 4.6 percent and rise cumulatively by 22 percent, on average, over the next five years, according to the first quarter Zillow® Home Price Expectations Survey. Additionally, a majority of panelists indicated support for policies that would allow certain underwater homeowners to refinance at today's low rates.

The survey of 118 economists, real estate experts and investment and market strategists was sponsored by leading real estate information marketplace Zillow, Inc. (NASDAQ: Z) and conducted by Pulsenomics LLC. This is the first survey edition that utilized the U.S. Zillow Home Value Index (ZHVI) [i] as the reference benchmark for the panel's home price expectations [ii].

Survey respondents predicted home values will rise another 4.2 percent on average in 2014, before moderating somewhat to annual appreciation rates between 3.6 percent and 3.8 percent for 2015, 2016 and 2017. On average, panelists predicted home values to rise 4.1 percent annually from 2013 through 2017, exceeding the pre-housing bubble (1987-1999) average annual appreciation rate of 3.6 percent. This is the first time the predicted average annual growth rate for the next five years has surpassed pre-bubble levels since the survey's inception three years ago.

"The panel is quite bullish on home prices near-term, considering a pre-bubble average appreciation rate of 3.6 percent per year," said Zillow Chief Economist Dr. Stan Humphries. "That said, their expectations are a bit shy of the home value gains of 5.5 percent that we saw in 2012, implying some moderation in the pace of gains. The panel expectations are consistent with continued strong home value growth this year fueled by tighter-than-normal inventory of for-sale homes and robust demand attributable to high affordability and a stronger general economy."

The most optimistic quartile [iii] of panelists predicted a 6.1 percent increase in home values in 2013, on average, while the most pessimistic [iv] predicted an average increase of 3 percent. Through 2017, panelists predicted cumulative home value changes of 22 percent, on average. Expectations for cumulative home value change projections ranged from 34.2 percent among the most optimistic quartile to 11.7 percent among the most pessimistic, on average.

GSE Wind-Down Period and Refinance Options For Underwater Borrowers

The first quarter 2013 Zillow Home Price Expectations Survey asked the panel to indicate their view of a reasonable timeframe for "winding-down" government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac; and to weigh in on the debate over the merits of providing new refinancing options to underwater homeowners who are current on their mortgage payments.

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