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Experts: Unaffordable Rents Not Going Away Soon

Among the more than 100 experts surveyed in the Zillow® Home Price Expectations Survey, more than half said rental affordability will continue to deteriorate for two years or more

- Panelists predicted U.S. home values will rise 4.4 percent in 2015, to a median value of $187,040.

- Of the experts with an opinion, 51 percent expect rental affordability won't improve for two or more years. Thirty-three percent expect it to take one or two years, and five percent said they expect rental affordability to improve within a year.

- On average, panelists said they expect median U.S. home values to exceed their pre-recession peak of $196,400 by May 2017.

Feb 13, 2015

SEATTLE, Feb. 13, 2015 /PRNewswire/ -- Unaffordable rents are making it hard for people to save for down payments, and they aren't likely to ease up for at least two yearsi, according to the latest Zillow® Home Price Expectations Survey sponsored by Zillow, Inc. and conducted quarterly by Pulsenomics LLC.ii

More than half (52 percent) of the respondents with an opinion on this issue said the market will correct the nation's soaring rents over time, and no government intervention is required. About one-third (35 percent) of respondents said rising rents are not a problem.iii

"Solving the rental affordability crisis in this country will require a lot of innovative thinking and hard work, and that has to start at the local level, not the federal level," said Zillow Chief Economist Dr. Stan Humphries. "Housing markets in general and rental dynamics in particular are uniquely local and demand local, market-driven policies. Uncle Sam can certainly do a lot, but I worry we've become too accustomed to automatically seeking federal assistance for housing issues big and small, instead of trusting markets to correct themselves and without waiting to see the impact of decisions made at a local level. Broader federal efforts aimed at increasing real wages and job opportunities will go a long way toward helping renters, but real, lasting solutions to rising rents need to be found locally."

The survey also asked panelists about President Obama's announcement last month aimed at helping middle-class homebuyers through a reduction in FHA mortgage insurance premiums.

Two-thirds (66 percent) of survey respondents with an opinion said they think the changes will be "somewhat effective in making homeownership more accessible and affordable," but almost half (49 percent) said the new initiatives are unwise, unnecessary and potentially risky for taxpayers.iv 

The panelists predicted U.S. home values will rise 4.4 percent in 2015, to a median value of $187,040. The most optimistic forecasted a 5.5 percent increase, while the least optimistic projected a 3.1 percent increase. On average, panelists said they expect median U.S. home values to exceed their pre-recession peak of $196,400 by May 2017.

"During the past year, expectations for annual home value appreciation over the long run have remained flat, despite lower mortgage rates," said Terry Loebs, Founder of Pulsenomics. "Regarding the near-term outlook, there is a clear consensus among the experts that the positive momentum in U.S. home prices will continue to slow this year.  At 4.4 percent, overall expectations for nationwide home value growth in 2015 are one-third lower than the actual 6.6 percent appreciation rate recorded last year."

About Zillow:
Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. The Zillow, Inc. portfolio includes®, Zillow Mobile, Zillow Mortgages, Zillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Mortech®, HotPads®, StreetEasy® and Retsly™. The company is headquartered in Seattle., Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy, HotPads and Digs are registered trademarks of Zillow, Inc. Retsly is a trademark of Zillow, Inc.

About Pulsenomics:
Pulsenomics LLC ( is an independent research and consulting firm that specializes in data analytics, new product and index development for institutional clients in the financial and real estate arenas. Pulsenomics also designs and manages expert surveys and consumer polls to identify trends and expectations that are relevant to effective business management and monitoring economic health. Pulsenomics LLC is the author of The Home Price Expectations Survey™, The U.S. Housing Confidence Survey, and The U.S. Housing Confidence Index. Pulsenomics®, The Housing Confidence Index™, and The Housing Confidence Survey™ are trademarks of Pulsenomics LLC.

i Survey respondents were asked "How much longer to you expect rental affordability to continue deteriorating?" Of those with an opinion, 5 percent said less than one year, 33 percent said 1-2 years, 31 percent said 2-3 years, 11 percent said 3-4 years, 1 percent said 4-5 years, and 8 percent said more than five years. 11 percent were not sure.
ii This edition of the Zillow Home Price Expectations Survey surveyed 101 experts between Jan. 20 and Jan. 29. The survey was conducted by Pulsenomics LLC on behalf of Zillow, Inc.
iii Respondents were asked: "For today's tenants who aspire to own a home, rising rent payments have been making it more difficult to save for a down payment and become tomorrow's home buyers. Which of the following choices best reflects your view?" Of survey respondents with an opinion, 52 percent said markets would address this problem. Three percent said it requires government intervention, and 35 percent said it is not a problem.
iv Respondents were asked, "Overall, how effective do you think these initiatives will be in making homeownership more accessible and affordable for significant numbers of first-time homebuyers?" Five percent said highly effective, 66 percent said somewhat effective, 21 percent said somewhat ineffective, and 3 percent said highly ineffective. Asked about the wisdom of the initiatives, 32 percent who had an opinion said they were wise, 49 percent said unwise and risky for taxpayers.


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SOURCE Zillow, Inc.

For further information: Emily Heffter, Zillow, 206-757-2701 or