WSJ weekly forecast: Housing

The WSJ forecasting survey, released about 20 minutes ago, showed a further decline in housing. The average prediction for 1 year from today shows an increase of 0.43%. While this is below inflation, it is at least above water.

The WSJ adds this:

The Office of Federal Housing Enterprise Oversight's home price index, upon which the economists based their predictions, has never posted an annual decline since its first calculation, in 1975. The last time that the index trailed inflation was in 1996, when home prices rose 2.6% compared to a 2.9% inflation rate.

David Wyss, chief economist for S&P is then quoted:

The most volatility will come in areas like Florida, where there are a large number of second homes and investment properties," he said. "Places like Michigan, which is seeing declining employment, will also see home prices declining.

Housing prices are just plain tough to predict. It is very rare that we see a decline in nominal prices(nationally), though the 2001-2006 price appreciation is also very rare. I think these forecasts should have confidence intervals or something.

In honor of this here are my offical predictions:

-I am 90% confident 3rd quarter GDP will change at a rate between +2.4% and +3.1%

-I am 90% confident that the OFHE (housing price) will change at a rate between -15% and +7% between now and September 1, 2007.

Good luck!