JPMorgan Forecasts Rising Home Prices

investors on housingJPMorgan Chase predicts home prices will rise as much as 7% in 2013. This forecast is much more optimistic than initially expected because JP Morgan now expects investors will continue to take interest in nonperforming loans and distressed properties. According to JP Morgans’ February investor survey, most investors believe home prices will increase by less than 5% while some investors expect home price growth to increase as much as 15%. The nation’s shadow inventory is also expected to fall to 3 million by the end of this year. While 1 in 4 home owners were underwater in 2011, JP Morgan expects only 1 in 10 borrowers ot be underwater in their mortgages by the end of 2013.

In February existing sales were down to the lowest level since March 2005. Across the country, hosuing markets are seeing lower levels of inventory. While inventory levels are down, a historically large foreclosure inventory should continue to exist through 2017, reflecting the growing share of delinquent loans in judicial states since timelines are considerably longer.

The path to recovery looks promising. JP Morgan forecasts home prices to rise the next three years, with 3.9% growth expected in 2014 and a 3.2% increase anticipated in 2015, representing roughly 14% in cumulative growth. The projected growth rates are still relatively small for 2014 and 2015 because JPMorgan believes income growth and lending standards will limit price gains.

To read more about JP Morgan’s forecast, visit

Posted in RE News.

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