With home prices increasing, housing experts are optimistic about a strong revival in the residential real estate market.
According to the Sept. 2012 Zillow home Price Expectations survey, which analyzed responses from economists, real estate industry experts and investment and market strategists, home prices will record an overall increase of 2.3 percent during 2012.
The June survey had forecast a decline of 0.4 percent.
Respondents have also revised their 2013-2016 forecasts, saying that home values will increase in each year.
"This is further evidence that we're seeing a true recovery in the housing market," Zillow chief economist Dr. Stan Humphries said in a statement. "Not since mid-2010 – in the midst of the homebuyer tax credits – have we seen this group so bullish on housing. It's refreshing to see this optimism at a time when the market seems to be making an organic recovery, in the absence of an artificial stimulant like the tax credits."
Mortgage Interest Deduction
Meanwhile, many respondents said it was time to bring in changes in the mortgage interest deduction. Though it is popular with homeowners – both existing and aspiring – “it costs the federal government about $90 billion a year," said Pulsenomics LLC founder Terry Loebs, in a statement. "Time will tell whether the unprecedented fiscal challenges facing the U.S. coupled with a housing market now on the mend will embolden more policymakers to touch this lightning rod."
However, many believe that this policy was largely responsible for the housing bubble.
According to the North Country Times, "This incentive to buy real estate helped inflate the housing bubble. Sold as a tax haven, the deduction propelled ordinary folks to take out bigger mortgages than they should have. And their ability to borrow more let them bid up house prices to absurd levels. When the bubble splattered, and house prices plunged, many buyers found themselves owing more on their home than the place was worth.”
