Zillow polls panel of housing experts for 2023
forecasts and beyond
- Metros in the South and Midwest are the least likely to see
price declines over the next year.
- Vacation market areas are most likely to see price
declines.
- Rent growth and inflation should outpace appreciation in home
prices and the stock market over the next year.
SEATTLE, Sept. 29,
2022 /PRNewswire/ -- Sky-high mortgage costs are
driving down competition among home shoppers, and a market firmly
in favor of buyers is expected before the end of next year,
according to a majority of economists and housing experts surveyed
by Zillow®. The panel also expects rent growth to outpace inflation
during the next 12 months, as priced-out potential home buyers
exert additional pressure on the rental market.
Home value growth, which hit record highs over the course of the
pandemic, is now slowing as affordability challenges magnified by
quickly rising mortgage rates are pushing many buyers to the
sidelines. Values are ticking down slightly across the U.S. and
declining more steeply in some of the most expensive metros, as
well as those metros that grew the fastest over the past two
years.
Although home price growth has slowed, the market is far from
pre-pandemic norms. Zillow's latest market report showed
listings' typical time on market, while rising, is still 11 days
shorter than in 2019. Inventory is ticking up as well, but is
still down almost 42% compared to 2019. The majority of the panel
(56%) expects a significant shift in buyers' favor by sometime next
year. Another 24% predicted that shift would come in 2024, 13%
pointed to 2025, and just 8% expect it after 2025.
"After the frantic rush for real estate over the past two years,
buyers are finally seeing a calmer market. Those still able to
afford homeownership are quickly regaining lost leverage, but this
shift to a more balanced market is still in its early stages," said
Nicole Bachaud, senior economist at
Zillow. "Home shoppers priced out of the market are in a tight
spot, though, as high and rising rents could cut further into their
ability to save up for a down payment."
Inexpensive Midwest markets — such as Columbus, Indianapolis and Minneapolis — are the least likely to see home
prices decline over the next 12 months, according to survey
respondents. Fast-growing markets in the South, like Atlanta, Nashville and Charlotte, are also expected to retain their
heat.
Markets projected to cool the fastest are those that saw some of
the largest growth over the course of the pandemic, including
Boise, Austin and Raleigh.
Suburban and exurban areas are predicted by the panel to retain
their heat over the next 12 months, while vacation areas were
considered the most likely to see price declines.
Rent growth should remain strong in the short term as high home
prices keep many would-be first-time buyers in the rental market.
Over the next 12 months, rents are expected to grow more than
inflation, the stock market and home values.
The panelists predict an average of 5.4% rent growth throughout
2023 — lower than the 8.6% annual growth they expect to see
by the end of this year, but still higher than what Zillow
data shows to be just under 4% annual growth in the years
prior to the pandemic.
This demand for rentals has already spawned new supply in the
pipeline. Builders responded to declining home purchases by ramping
up construction on multifamily units, bringing starts to
their highest level in years. The panel projects the stock
market will rebound over the next three years, outpacing growth in
home prices and rents as overall inflation cools.
Although the panel-wide 2022 expected home price appreciation
rate ticked up to 9.8% from 9.3% in this most recent survey, all
107 survey respondents project home price deceleration in 2023. The
share of panelists who believe their long-term outlook might be too
optimistic jumped up to 67% from 56% last quarter.
"U.S. home price appreciation is clearly easing up in response
to the historic surge in mortgage rates," said Terry Loebs, founder of Pulsenomics. "Our expert
panel's mean projections indicate that residential rent price
growth is expected to outpace headline CPI inflation over the
coming three years and exceed home price growth through at least
2025. Despite softening house prices, this implies that
affordability hurdles for prospective first-time homeowners will
remain high and persist for years to
come."
About Zillow Group
Zillow Group,
Inc. (NASDAQ: Z and ZG)
is reimagining real estate to make it easier to unlock
life's next chapter. As the most visited real estate website in
the United States,
Zillow® and its affiliates offer customers an on-demand
experience for selling, buying, renting or financing with
transparency and ease.
Zillow Group's affiliates and subsidiaries include Zillow®,
Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing
Services™, Trulia®, Out East®, ShowingTime®, Bridge Interactive®,
dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an
Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
About Pulsenomics
Pulsenomics LLC
(www.pulsenomics.com) is an independent research firm that
specializes in data analytics, opinion research, 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, The
Housing Confidence Index, and The Transaction Sentiment Index.
Pulsenomics®, The Housing Confidence Index™, The Transaction
Sentiment Index™, and The Housing Confidence Survey™ are trademarks
of Pulsenomics LLC.
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SOURCE Zillow