Home Prices set to Rebound says Survey
Some of the forecasters surveyed by MacroMarkets were far from the average. Joseph LaVorgna, an economist at Deutsche Bank, sees home prices rising 37% by the end of 2014. Both Anthony Sanders, a professor of real-estate finance at George Mason University, and Gary Shilling, president of A. Gary Shilling & Co., expect declines of about 18%.
Separately, the U.S. Census Bureau reported that single-family housing starts in April surged to a seasonally adjusted annual rate of 593,000, up 10.2% from March. Ivy Zelman, chief executive of research firm Zelman & Associates, said builders stepped up production ahead of the April 30 deadline for sales qualifying for a federal tax credit, but since then have cut back.
Even if home values start to bounce back, the posibility of rising interest rates pose challenges for the reverse mortgage industry. First, rates rising will reduce the amount of money available to consumers. Second, if rates rise the amount of equity in borrowers homes will decline according to a new report from Annaly Capital Management.
