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Analysts Say Government Should Continue ‘Significant’ Role in Housing

Ideally, the government should back up to 35 percent of all new mortgages, according to the median response given in a recent ""Zillow"":http://www.zillow.com/ survey which polled 108 economists, real estate experts, and investment and market strategists.


Among those surveyed were analysts and authorities from such institutions as Barclays Capital, Equifax, the International Monetary Fund, Auction.com, Whartonâ€"University of Pennsylvania, Local Market Monitor, and the Urban Land Institute.

The government currently backs about 90 percent of all new mortgages, and according to Zillow the last time the government held a 35 percent share of new originations was in 2006 ""at the height of the housing bubble.""

Despite a widespread opinion that the government's current majority share should be scaled back, about 58.4 percent of the experts and analysts surveyed say the government should continue to play a ""somewhat significant,"" ""significant,"" or ""very significant"" role in the housing market. Just 8 percent say the government should exit the housing market completely.

""Policy discussions centered on reforming the nation's housing finance system have only just begun, and it will be very interesting to see what comes out of these debates and how much the market will react to new proposals,"" said Stan Humphries, chief economist at Zillow.

Zillow polled sentiment surrounding government participation in the housing market as part of its quarterly ""Zillow Home Price Expectation Survey."":http://zillow.mediaroom.com/index.php?s=159&item=395

Zillow found market analysts generally expect price growth to dwindle but not stagnate over the next few years. Those surveyed anticipate price growth will reach between 5.6 percent and 8.3 percent for 2013. Next year, they anticipate a 4.3 percent rise in prices, and by 2018, they expect prices to increase just 3.4 percent annually.

""The housing market has seen a period of unsustainable breakneck appreciation, and some cooling off is both welcome and expected,"" Humphries said.

Based on analysts' forecasts, prices should exceed their May 2007 peak by 2018. By the end of 2018, the national median home price could exceed $200,000.


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