Full housing recovery may not happen until 2018: Survey

Home prices may have hit bottom in early 2012, but the housing recovery still has a long way to go. In fact, home values may not exceed their prerecession peak until the early part of 2018, according to a quarterly survey of more than 100 experts sponsored by Zillow.

"We've reached a point in the recovery where the only real cure-all is time," Zillow Chief Economist Stan Humphries said. The survey included economists, real estate professionals, investment and market strategists, and was conducted for Zillow by Pulsenomics LLC.

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The panelists predicted that U.S. home values will finish out 2014 with a gain of 4.8 percent from 2013, with the median home value at $176,760. Most blamed shifting demographics and the weak financial state of today's potential first-time home buyers for the slower-than-expected recovery.

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Millennials are facing high rents, which prevent them from saving for a down payment. They are also marrying later in life; marriage is one of the top drivers of home ownership.

"The market remains very challenging for younger, first-time home buyers who face an uphill battle saving for a down payment, qualifying for a mortgage and finding an affordable home to buy. At the same time, many older homeowners are trapped underwater or are unable to find buyers for their homes," Humphries said.

The experts predicted a leveling off of annual price increases nationally starting in 2015, with gains averaging 3.7 percent through 2019. That is a stark 20 percent drop from the gains originally expected for the year.

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"Although this projected decline is significant, it's a less dramatic call compared to that made by our panelists one year ago, when they correctly anticipated a much larger change from 2013's 7.3 percent home value appreciation rate by projecting 4.3 percent for 2014," said Terry Loebs, founder of Pulsenomics.

Household formation has been running historically low since the recession, and all of it has been in rental households. While rents are still rising, new construction is now adding thousands of new units, which could slow the gains and help more cash-strapped renters. That, however, will take time. While affordability is slowly shifting back toward home ownership, consumer confidence in housing, especially among younger Americans, is still far behind.