Zillow survey – Still many outliers

The quarterly Pulsenomics/Zillow home price expectations survey results were published last week.  (See link).   For those new to this space, this is probably the most comprehensive (and historic) survey of home price expectations.   Over 100 contributors (including me) post their Q4/Q4 annual forecasts on a yearly basis out to 2018.

The survey results reference forecasts for the Zillow National Home Value Index (ZHVI) (click here for link to Zillow website) .  While this is a change from past years when the Case Shiller National Home Price Index was the reference index, the results are similar- general bullishness with many outlier bulls and bears.   The median estimated increase for the ZHVI index from 2012 Q4 to 2018 Q4 is ~27.3%, with a standard deviation of ~9.8%.

Both the Zillow and CS National index have fundamental differences versus the Case Shiller CUS 10-city index that the CME futures reference so any comparison between the survey results and CME futures needs to be qualified.   As a aside, I posted a 25.2% increase for the Zillow Q4 2017 survey based on an observation of the CME CUS Nov ’17 mid-market quote that (adjusted for 3 additional months) was ~36.6.% above Dec. 2012 CS values.  (For a discussion of the differences between ZHVI and the Case Shiller National index see the link in the Resources section or click here.)

No, my focus here is not converting one index to another, but with the outliers.  Ten participants have 2018 index changes to be more greater than +40% (vs. 27.3% median), while seven are looking for gains of less than 15% (with two calling for negative 2012-2018 price changes).    There are annual projected differences ranging from minus 5% in 2014 to 15% gains in 2016.

Even acknowledging the index differences, I call on these participants to either a) put their money where their mouth is, and/or b) to share with their followers that if they really believe these forecasts, that there is a platform (CME trading) where their readers can express these views, either in longer-term outright trades, or for those looking for outlier one-year results, in calendar spreads.

Feel free to contact me (johnhdolan@homepricefutures.com) if you want to learn more about how to convert your views into trades.