Zillow Report: A Buyer's Market in 2020?
In a recent survey conducted by Zillow with Pulsenomics LLC, over 100 real estate economists and industry experts shared their predictions about the U.S. housing market in relation to buyer or seller leanings.
While annual home-value appreciation was faster in 2018 than 2017, inventory shortages over the past 42 consecutive months have created a market environment that favors sellers. However, recent data suggests buyers and sellers may soon be switching roles. Price reductions are becoming more commonplace with home value growth slowing down in over half of the largest U.S. metros.
A large group of survey respondents (43 percent) believe buyers will control the market in 2020. The shift may be sluggish, however, as appreciation even in slowed markets is above historic averages, signaling that the sellers' market may endure for a short while longer. In fact, U.S. home values are expected to increase 5.9 percent in 2018.
"For the past several years, home sellers held all the cards at the negotiating table, fielding multiple offers while buyers faced stiff competition and a fast-moving market," said Zillow Senior Economist Aaron Terrazas in a statement. "Conditions are starting to show signs of easing up, but the effects of years of limited construction still linger. Inventory is still falling on an annual basis, and home values are growing well above their historic pace. Although these trends are starting to lose their edge, it is far too soon to call it a buyer’s market."
"While ongoing supply constraints are reinforcing the floor on home prices right now, the experts’ forecasts still imply the joists will start to crack sometime next year, and result in sub-three percent annual home-value appreciation in 2020 and beyond," said Pulsenomics® Founder Terry Loebs, who noted that another indicator from the latest survey is consistent with a shifting market. "For the first time, a majority of the experts said that there is downside risk to their long-term outlook for home values nationally––and they outnumber experts who assigned upside risk to their forecasts by more than a three-to-one ratio."