SEATTLE, Sept. 24, 2020 /PRNewswire/ -- After
watching the for-sale housing market largely shrug off the
potential impacts of the coronavirus pandemic this summer, a panel
of experts is singing a much more bullish tune about short-term
home price performance than in the spring. But a few clouds appear
when looking further out. Skepticism remains in the long term with
elevated unemployment expected to persist into the next
decade.
The Zillow® Home Price Expectations Surveyi,
sponsored by Zillow and conducted quarterly by Pulsenomics LLC,
asks more than 100 economists, investment strategists and real
estate experts for their predictions about the U.S. housing market.
The Q3 survey focused on the short- and long-term outlook for home
prices, as well as expectations for U.S. unemployment.
Just three months ago, when the housing market was in the midst
of what turned out to be only a brief lull in activity, the
panelists expected a slight (0.3%) decline in home prices for 2020.
That dip has failed to materialize thus far as historically low
inventory and heavy buyer demand have pushed up prices, and
panelists have adjusted expectations accordingly.
Panelists are now more optimistic than they were even before the
pandemic, forecasting a 3.7% increase in home prices this year
compared to an average expectation for a 3.3% increase in the first
quarterly survey of 2020. Expectations for home prices in 2021 were
also raised, up to 2.7% average forecasted growth from 0.9% last
quarter, marking the most optimistic the panel's outlook for 2021
has been since Q1 2018.
"In many ways, the pandemic has helped supercharge a
pre-existing housing supply shortage that has struggled to keep up
with strong demand," said Zillow economist Treh Manhertz. "Many of
those fortunate enough to have kept their jobs are looking to take
advantage of low mortgage rates by jumping into the market, and
they're finding competition to be fierce with inventory as limited
as ever. The longer-term path for prices will depend largely on the
course of inventory, including whether homeowner finances are
stable enough to avoid a wave of distressed sales when forbearance
terms expire and at what level builders, who are reporting sky-high
confidence, can bring homes to market."
The panel is now nearly unanimous in their view that home prices
will rise this calendar year, with only two of 104 respondents
indicating expectations for a nationwide price fall. In the
previous (Q2 2020) survey, 48 of 106 respondents expected a
decline.
"In contrast to the debate concerning the contours and
sustainability of the U.S economic recovery, these survey data
reveal a definitive and remarkably sharp V-shape in U.S. home price
expectations," said Terry Loebs,
founder of Pulsenomics. "In a matter of a few months, the pandemic
has turbo-charged what had been relatively limited acceptance of
remote work, amplified the value of larger living spaces, and
ushered in a new era of monetary accommodation by The Fed. With
these fundamental forces stoking demand for homeownership amidst
stubborn supply constraints, it's hard to imagine home price
expectations returning to the lows of last quarter any time
soon."
Beyond next year, panelists on average downgraded their home
value growth forecasts. Price growth expectations are down from
last quarter for 2022 (2.7%, down from 2.9%), 2023 (3%, down from
3.3%) and 2024 (3.3%, down from 3.6%)ii.
Experts with lingering reservations about the sustainability of
home value growth are focused on the labor market, where a
consensus is forming that employment will take years to recover to
pre-pandemic levels. On average, panelists indicated a 44%
probability that the U.S. will return to 3.5% unemployment -- the
level recorded in February -- by the end of the decade. Even those
who believe it's likely we will reach that milestone during the
2020s typically think it will take until at least mid-decade to
recover -- 71% said 2025 or later is the soonest that the
record-low rate from February will be
revisited.
Year
|
Annual Home Value
Growth Expectation - Q2
2020 Survey
|
Annual Home Value
Growth Expectation - Q3
2020 Survey
|
2020
|
-0.3%
|
3.7%
|
2021
|
0.9%
|
2.7%
|
2022
|
2.9%
|
2.7%
|
2023
|
3.3%
|
3.0%
|
2024
|
3.6%
|
3.3%
|
About Zillow
Zillow, the most visited real estate
website in the U.S., is building an on-demand real estate
experience. Whether selling, buying, renting or financing,
customers can turn to Zillow's businesses to find and get into
their next home with speed, certainty and ease.
In addition to for-sale and rental listings, Zillow Offers buys
and sells homes directly in dozens of markets across the country,
allowing sellers control over their timeline. Zillow Home Loans,
our affiliate lender, provides our customers with an easy option to
get pre-approved and secure financing for their next home
purchase.
Millions of people visit Zillow Group sites every month to start
their home search, and now they can rely on Zillow to help them
finish it — with the same confidence, ease and empowerment they've
come to expect from real estate's most trusted brand.
Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and
ZG).
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.
i This edition of the Zillow Home Price Expectations
Survey surveyed 104 experts between August
17, 2020 and September 1,
2020. The survey was conducted by Pulsenomics LLC on behalf
of Zillow, Inc. The Zillow Home Price Expectations Survey and any
related materials are available through Zillow and Pulsenomics.
ii Figures cited are panel-wide averages.
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SOURCE Zillow