Photo: Robert Clark
Mark your calendars: real estate experts predict the US housing market will finally tilt in favor of buyers sometime in 2020.
Housing market conditions have kept sellers in the driver’s seat for the past few years, but new data suggests the balance may be starting to shift toward buyers, according to the results of a recent survey conducted by the listing site Zillow and Pulsenomics.
“Recent data showing that home value appreciation is slowing in large markets, price cuts happening more frequently and the pace of inventory declines slowing dramatically point to the beginning of a shift to a buyer’s market,” Zillow Senior Economist Aaron Terrazas tells Livabl.
Three out of four economists surveyed felt the national housing market would not become a buyers’ market until 2020 — or later. But the largest share of respondents — 43 per cent — predict the national market will shift to buyers in 2020.
At the regional level, respondents anticipate that the Midwest market could tilt a full year before the rest of the country.
So far this year, annual home price appreciation has grown at a faster rate than in 2017. And, national inventory levels have fallen year-over-year for 42 consecutive months — two factors that experts admit have helped keep the market a sellers’ market for the last several years.
“The most pressing factor keeping the market firmly in the hands of sellers is incredibly limited inventory. Even when inventory starts to rise, it will be coming back from a very low base and it’s likely to take many more years before buyers have the kind of choice in the market that will enable them to take back meaningfully more control,” says Terrazas.
Although price growth is slowing, it remains above historic levels. Even with rising market shares of price cuts, some buyers might be outbid or priced out — particularly at the most affordable price points.
“Inventory has an even more significant impact on the lower end of the market with roughly half of all homes available for sale being in the top-third of the market,” says Terrazas.
The scarcity of available starter homes has created one of the most competitive and challenging markets for buyers in recent history, as rising prices have eroded affordability at the lower-end of the market.
“The crunch is particularly acute at the bottom end of the market – currently more than half of all homes for sale are in the top one-third of the market, leaving entry-level buyers to compete over a very limited pool of homes,” says Terrazas.
Zillow and Pulsenomics surveyed 118 real estate experts between August 1 and August 18.
Click here to read the entire report.