Stronger Price Gains for Home Prices in 2013

The S&P/Case-Shiller index on Tuesday reported home prices in January were up 8.1% from one year ago. And up from a 6.8% annual gain in December.

Two analysts who have stayed ahead of the pack are among those upgrading their forecasts for 2013. Ivy Zelman, chief executive of research firm Zelman & Associates, said Wednesday she was now expecting prices to rise by 7% this year, up from earlier estimates of 6%, 5%, and 3%.  Zelman has produced some of the most accurate housing forecasts last year.

She’s also calling for a 5% gain next year because she says the supply shortages and growing demand that fueled last year’s turnaround show no signs of easing. “The shortage of housing capacity continues to resonate,” Zelman said in a research note on Wednesday. “Just as deflation was a national headwind that stretched deeper into the economy than anyone would have imagined, we believe that appreciation can carry broad, positive implications for the consumer and economy beyond many expectations.”

John Burns, who runs a real-estate consulting firm in Irvine, Calif., is calling for a 9% gain in home prices this year, up from a 5% forecast late last year. The reason: strong investor demand and low interest rates that have boosted the purchasing power of buyers. Burns had similarly turned bullish on housing early last year.

The recent frenzy hit home for him when the woman cutting his hair last month said she and her husband wanted to invest in homes. “Here we go again,” he said.

A quarterly survey of more than 100 economists and housing forecasters last found that all but two expect prices to rise this year, with the average forecast of a 4.6% gain. Among those who have revised up their forecasts in the last month are analysts at Morgan Stanley, Bank of America, Capital Economics and J.P. Morgan, which have taken their forecasts to 6-8%, from earlier predictions of 3-6%.

There is still a shadow inventory out there of homes the banks have not put on the market. Search Fort Myers, Florida homes for sale.