New Home Price Projections 1

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New Home Price Projections
In preparing revenue projections for budget planning, many builders rely upon past trends to forecast price increases for future years. This method turns out to be very misleading after the enormous price fluctuations of 2004-2011.  A ten year trend of average price changes from 2001-2010 produces an overall average of 2.7 percent, whereas the ten years of steady growth from 1994 through 2003 provides an overall average of 4.7 percent (median of 4.4 percent) – a 74 percent differential, within a range of 3-6 percent.  The 1994-2003 period following the recession of 1990-91 is a reasonable model for recovery from the 2007-09 recession despite the lingering effects of unemployment and financial credit.  We can expect some similar opportunities in the coming decade.
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