Zillow’s latest Home Price Expectations Survey has revealed that it’s still a seller’s market as far as real estate is concerned, though the situation could change within the next 18 months.
The quarterly survey conducted for Zillow by Pulsenomics quizzed more than 100 real estate experts and economists on their predictions for the U.S. housing market, including when they expected the market to favor buyers over sellers.
It comes at a time when home value appreciation has been accelerating, growing faster this year than it did in 2017. Meanwhile, available inventory has fallen for 42 consecutive months. These two factors have created the conditions for a strong seller’s market, with multiple buyers chasing after the same properties.
However, data suggests that the scales could soon begin to tilt back in buyer’s favor. Home value growth has slowed in most of the nation’s biggest markets, and price cuts are becoming more common than before. Still, home price appreciation remains above the historic average in almost every market, especially for lower cost properties. As a result, more than 70 percent of experts polled by Pulsenomics said they believe it will remain a seller’s market until at least 2020.
But fast-forward 18 months and most experts say they expect housing to shift towards a buyer’s market by 2020. At the regional level, the panelists believe the Midwest will shift to a buyers market a year before the rest of the country. The most frequently selected year for the Midwest to start favoring buyers over sellers was 2019, while the other regions (Northeast, South and West) are expected to change in 2020 along with the nation overall.
"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. "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 buyers market."
Home values across the country are expected to continue to see strong appreciation in 2018, with a predicted 5.9 percent increase. 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 2020 little changed.