After home prices soared due to a lack of inventory and a recovering economy, over three-quarters of experts believe the shift to a buyer’s housing market should come in two years at the earliest, according to Zillow.
While the tide takes some time to turn, industry trends already signal the coming change. Home value appreciation is decreasing and the latest monthly data showed the percentage of listings with price cuts was up year-over-year at 14.2% nationally.
“The most prominent driving force that would shift the market dynamics would be a nationwide recession. In the previous iteration of the survey, we asked the same group of respondents when they expect the next nationwide downturn to occur, and they all pointed to early 2020. Those two things would coincide,” Aaron Terrazas, senior economist at Zillow, said in an interview.
The deficit of housing inventory has notoriously driven demand and prices. It’s declined on a year-over-year basis for 42 straight months. However, the declines are decelerating.
“Inventory is still declining on an annual basis, but a couple months ago it was declining at 8% a year, now it’s declining at 4% a year. So it’s slowed down. I think the primary force is homes sitting on the market longer, particularly at the top of the market,” said Terrazas.
“We see homes that used to sell within a week or two weeks of listing now are taking longer to sell. On any given day your buyer is going to find more homes on the market compared to a month ago.”
Zillow’s quarterly survey, conducted by Pulsenomics, received 98 responses from real estate economists and experts for their predictions about the U.S. housing market.