Sometimes it seems the housing bears hog all the attention at MBC. But the readership is evenly divided over what the next few years might hold for local RE prices.
That’s the indication from our most recent reader poll. Exactly half the people participating said they thought local RE median prices would be down 5% or more in 3 years, at the end of June 2011.
That means half took a sunnier view.
Almost a third (31%) felt that prices would be up more than 5% in 3 years.
A bullish sliver said prices would be up 20% or more,
while the plurality winner in this poll (the category with the highest single total) was the opinion that we would see an increase between 5% and 20%.
One-fifth of voters (19%) took the fence-straddling view that prices would be essentially flat, meaning +/-5%, in 3 years.
We did stipulate in the story setting up the poll (see “How Far Up OR Down in 3 Yrs?
”) that prices should be projected in nominal terms, not adjusted for inflation. So it’s worth noting that a “flat” value for a home in 2011 might really mean the real value has degraded somewhat.
With half the MBC readership looking for a smooth landing, we are reminded that, in a different recent poll, about half the respondents said they own a home in MB. (See “More About You
Now, about those bears. The folks expecting home price declines of some magnitude had 3 choices: drops of 5 to 20%, 20% to 35%, or 35% or more.
The smallest group was the one willing to project the most dire outcome – 13% of respondents thought prices would drop more than 35%. That would be worse than the 27.7% peak-to-trough drop in the local market median in the 1990s housing recession. (See “The 90s: What a Drag
Let’s consider what such a drop might look like. Based on data posted in comments, which we consider credible, the MLS shows a median price of $1.8m
for closed sales of SFRs in MB so far this year (Jan. 1-June 30, 2008).
Take 35% off that big number, and it’s a big number – $630k. That would push the median in 2011 down to $1.170m
. Devastating. But then, the extreme bears tend to think it’s silly that prices nearly tripled in just a few years.
The rest of the bears pretty evenly chose between two other price-drop scenarios. There were 19% who felt that a mild drop in the range of 5% to 20% was reasonable.
A more pessimistic group looked at a 20% to 35% drop – in line with the 1990s drops – as the more likely outcome. A price decline on that scale would leave the median price between $1.170m
Not listed as an option in the poll… is MBC going to be around to check back in, come July 2011? Interesting question and, like the subject of our poll, impossible to predict.