Why economist think US Home Prices to rise 8% this year
Bank of America has again revised up its home price forecast to 8 percent for 2013, up from 4.7 percent.
This is after a 7.3 percent rise in 2012.
In a new report titled “Someone say House Party?”, BAML’s Chris Flanagan, Michelle Meyer, and Justin Borst write that “a positive feedback loop has begun”. Basically, when people think home prices are rising, they think they will keep doing so and credit conditions will improve, and this in increases demand for homes.
And there’s proof of this. Fannie Mae‘s latest survey shows that 48 percent of respondents believe that home prices will rise over the next 12 months, only 10 percent forecast a fall.
“It is a powerful positive relationship especially in this environment of historically low interest rates and a Federal Reserve determined to keep policy accommodative.”
Read more: http://www.businessinsider.com/baml-us-home-prices-to-rise-8-2013-3#ixzz2NSvpIyOb
