SEATTLE, July 25, 2019 /PRNewswire/ -- The United
States set a record for the longest economic expansion this month,
and it is expected to go on even longer. The next recession will
likely begin in 2020, according to a panel of housing experts and
economists.
The Zillow® Home Price Expectations
Surveyi, sponsored by Zillow and conducted quarterly by
Pulsenomics LLC, asks more than 100 real estate economists and
experts for their predictions about the U.S. housing market. The Q2
survey also asked the panelists for their expectations about the
next recession, and how home-buying demand will change through the
end of next year.
Few panelists expect a recession to start by the end of this
year. Half of the experts surveyed said the next recession will
start in 2020, with nearly one in five (19%) identifying the third
quarter as the likely beginning. Another 35% of experts think the
current expansion will end in 2021.
The most likely cause for the next recession is trade policy,
followed by a stock market correction and geopolitical crisis. Only
a few experts think that a housing slowdown will be a significant
factor in causing the next recession, with 12 respondents naming it
among the three most likely triggers.
"Housing slowdowns have been a major component, if not catalyst,
for economic recessions in the past, but that won't be the case the
next time around, primarily because housing will have worked out
its kinks ahead of time," said Skylar
Olsen, Zillow director of economic research. "Housing
markets across the country are already heading into a potential
correction a solid year before the overall economy is expected to
experience the same. The current housing slowdown is in some ways a
return to balance that will help increase the resiliency of the
housing market when the next recession does arrive."
But even if a housing slowdown isn't the cause of the recession,
the housing market will likely feel the impact. Just over half of
the panelists (51%) expect home buying demand will be somewhat or
significantly lower in 2020 compared with 2019, while only 17% say
it will increase. Homes will likely stay on the market longer and
bidding wars will become less common. – in 2011, it took just over
17 weeks to sell a home, compared with just under 11 weeks to close
on a sale in 2018. The final sale price also was further below the
listed price throughout the Great Recession, hovering near 91% of
the original price in early 2011. Now, homes sell for about 98% of
the asking price.
Still, a recession would not result in a sudden plunge in home
values. Even in the Great Recession, when housing played a much
larger role than is expected for the next recession, national home
values fell on an annual basis for 54 months before reaching their
lowest point in 2012, and never fell by more than 1% month over
month.
Home value appreciation has slowed over the past several months,
from 8.1% annual growth in December
2018 to 5.2% in June 2019 –
the slowest annual pace since 2015. The expected decline in demand
in 2020 is likely to extend the housing slowdown going forward.
Home prices are predicted to rise 4.1% in 2019, but experts have
lowered their forecasts for home price appreciation for the next
couple years. They predict home prices will rise 2.8% in 2020, down
from their Q2 2018 prediction of 2.9% growth. Similarly, their 2021
forecasts have slid from 2.6% growth to 2.5% appreciation.
"More than any other factor with the potential to impact
home-buying demand through 2020, mortgage rates are viewed by our
expert panel to be most significant," said Pulsenomics Founder
Terry Loebs. Although 30-year
mortgages are near 18-month lows and available now at rates below
4%, the near-term outlook for home prices has actually weakened a
bit from the previous survey in February. Loebs explained,
"Together, these data suggest that most experts believe the recent
rate move is a temporary dip, and that home-buying demand through
next year will be dampened by other, more persistent factors that
affect affordability, such as constrained inventory and the growth
of house prices relative to wages."
Zillow
Zillow is the leading real estate and rental
marketplace dedicated to empowering consumers with data,
inspiration and knowledge around the place they call home, and
connecting them with great real estate professionals. In addition,
Zillow operates an industry-leading economics and analytics bureau
led by Zillow Group's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of
economists, data analysts, applied scientists and engineers produce
extensive housing data and research covering more than 450 markets
at Zillow Real Estate Research. Zillow also sponsors the quarterly
Zillow Home Price Expectations Survey, which asks more than 100
leading economists, real estate experts and investment and market
strategists to predict the path of the Zillow Home Value Index over
the next five years. Launched in 2006, Zillow is owned and operated
by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in
Seattle.
Zillow is a registered trademark of Zillow, Inc.
Pulsenomics
Pulsenomics LLC
(www.pulsenomics.com) is an independent research firm that
specializes in data analytics, new product and index development
for institutional clients in the financial and real estate arenas.
Pulsenomics also designs and manages expert surveys and consumer
polls to identify trends and expectations that are relevant to
effective business management and monitoring economic health.
Pulsenomics LLC is the author of The Home Price Expectations
Survey™, The U.S. Housing Confidence Survey, and The Housing
Confidence Index. Pulsenomics®, The Housing Confidence
Index™, and The Housing Confidence Survey™ are trademarks of
Pulsenomics LLC.
i This edition of the Zillow Home Price Expectations
Survey surveyed 112 experts between May 1,
2019 and May 16, 2019. The survey was conducted by
Pulsenomics LLC on behalf of Zillow, Inc.
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SOURCE Zillow