Zillow Research Shows What to Expect from the Market in the Coming Year

May 3, 2020
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Predicting the future of the market is a challenge now more than ever. COVID-19’s impact has changed the landscape of markets across the globe and companies are putting more effort into forecasting what happens after things go back to normal. 

Zillow researchers are predicting home prices to fall 2% to 3% through the end of the year, given the pandemic’s effect on the housing market. They also predict home sales to fall 60% before both levels begin to stabilize. This could take until the end of 2021. 

The researches used macroeconomic and housing data in finding these numbers. The results are a mix of good and bad and are based on the projected timeline of the pandemic itself. 

Within the next two years, and on top of the housing price drop, a slow recovery throughout 2021 with pricing returning to match the levels of 2019, by the third quarter of 2021. 

Home sales have declined 50% from their pre-pandemic levels when compared to the end of 2019. Zillow expects home sales to hit an all-time low in Q2 before starting its slow ascent closer to the end of Q2 2020. 

And luckily, the number of transactions is expected to recover an impressive 97% of Q4 2019 levels by the end of 2021, showing a bounceback is imminent.

Zillow Forecast

Source: Zillow.com

The researchers came to these conclusions for a number of reasons. Unemployment numbers were down in the recent fiscal year and the housing market began 2020 strong. On the other hand, corporations around the country have been seeing high debt numbers and have opted to go for short-term solutions rather than long-term investments, viewing them as ‘tedious’. 

In February of this year, the Federal funds rate for essential funding set by the Federal Reserve was lower than what is considered normal, leading the Federal government with less money to use to stimulate the economy. This, along with high demand from home buyers and low mortgage interest rates, meant the market was in the perfect position to see a strong Q1 2020. 

Then the pandemic hit and unemployment has inched near depression levels. Retail sales have plummeted and industrial production has fallen the most since the 40’s. All of this and more were the reasoning behind Zillow’s conclusion. 

When it comes to the numbers, Redfin research had a slightly different viewpoint of the current and future market environment. The company said that home prices are stagnating, which isn’t much different than a 2-3% drop, but enough to give consumers a better idea of what to expect in the coming year.

May 3, 2020
Victoria has been writing about property portals and marketplace sites for Online Marketplaces for over 3 years. She is also our resident artist and is responsible for all of the infographic content on the site.

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