by Mario & Jennifer Ruiz 10/9/2018
More than three quarters (76 percent) of experts said they don’t expect national housing market conditions to shift toward a buyers market until 2020 or beyond.
A Real Buyers Market? Wait Until at Least 2020
- More than three quarters (76 percent) of experts said they don’t expect national housing market conditions to shift toward a buyers market until 2020 or beyond.
Despite a slew of national housing market trends seemingly pointing to a rapid shift in negotiating power away from home sellers, experts say they don’t expect market forces to shift meaningfully toward buyers until at least the end of this decade.
More than three quarters (76 percent) of experts said they don’t expect national housing market conditions to shift meaningfully toward a buyers market until 2020 or beyond, according to the Q3 Zillow Home Price Expectations Survey. The quarterly survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 real estate economists and experts for their predictions about the U.S. housing market, including when they expect the market to favor homebuyers over sellers.
For years, annual home value appreciation has been well above historic norms and has undergone lengthy periods of acceleration – this past July, U.S. home values grew at a faster pace than July of last year.
Additionally, inventory of homes available for sale has fallen year-over-year in each of the past 42 months, helping keep upward pressure on prices as buyers compete for a limited pool of available homes. These conditions have contributed to putting sellers firmly in the driver’s seat for the past several years, at the expense of a buyers market.
But recent data suggests the winds are beginning to shift: Home value appreciation is slowing in many large markets, price cuts are becoming more common and the pace of inventory declines has slowed dramatically, among other trends. But those shifting winds, while noticeable, have yet to strengthen to the point where they transition from buyer headwinds into tailwinds. Even in those markets where appreciation has slowed, it remains above its historic average rate. While inventory may be starting to creep back in some areas, it’s still falling nationwide – and when it does come back it will be from a very low level. And the crunch is particularly acute at the bottom end of the market – currently more than half of all homes for sale are in the top one-third of the market, leaving entry-level buyers to compete over a very limited pool of homes.
So sellers continue to have the upper hand – for now, anyway.
Among the surveyed experts, the largest share (43 percent) said the national housing market will shift decidedly to a buyers market in 2020, followed by 18 percent that said it would shift in 2021. Just 5 percent of panelists said they thought the national market was already a buyers market – roughly half the share (9 percent) that said the market would not meaningfully shift until sometime after 2022. Housing market conditions in the Midwest are expected to shift in favor of home buyers sooner than other regions–nearly half (47 percent) of the expert panelists project buyers to be in the driver’s seat before the end of next year.
A Record, Then a Recession?
Panelists were also asked for their projections of home value growth over the next several years. Home values across the country are expected to continue to see strong appreciation in 2018, with a predicted 5.9 percent increase by December compared to December 2017. Growth is expected to slow to 4.2 percent by the end of next year, before falling below 3 percent in each of the years from 2020 through 2022. Although most panelists have made upward revisions to their home-value growth projections from a year ago, the adjustments are focused on the near-term, leaving the outlook beyond next year little changed.
The projections for sustained strong growth through at least next year track with panelists expectations that the current business cycle has yet to reach its peak – 70 percent of panelists said the current cycle is likely to reach its peak in 2019 or 2020. If the current expansion – essentially, a prolonged period of economic growth without a recession to break it up – lasts another year, it will officially become the longest period of economic expansion in U.S. history. On average, panelists said there was a 70.5 percent chance that this expansion would set a new record.
What happens beyond that, though, remains to be seen. Earlier this year, the same panel said they expected the next recession to begin in 2020.
Article courtesy of: zillow.com
