What Are the Experts Saying About Future Home Prices?

A worldwide pandemic and an economic recession have had a tremendous effect on the nation. The uncertainty brought about by both has made predicting consumer behavior nearly impossible. For that reason, forecasting home prices has become extremely difficult.

Normally, there’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Mortgage applications to buy a home just rose to the highest level in 11 years while inventory of homes for sale is at (or near) an all-time low. That would usually indicate strong appreciation for home values as we move throughout the year.

Some experts, however, are not convinced the current rush of purchasers is sustainable. Ralph McLaughlin, Chief Economist at Haus, explained in their June 2020 Hausing Market Forecast why there is concern:

“The upswing that we’ll see this summer is a result of pent-up demand from homebuyers and supply-in-progress from homebuilders that has simply been pushed off a few months. However, after this pent-up demand goes away, the true economic scarring due to the pandemic will begin to affect the housing market as the tide of pent-up demand goes out.”

The virus and other challenges currently impacting the industry have created a wide range of thoughts regarding the future of home prices. Here’s a list of analysts and their projections, from the lowest depreciation to the highest appreciation:

CoreLogic: Year-Over-Year decline of -1.5%
Haus: Year-Over-Year decline of -1%
Zillow: Year-Over-Year change is forecasted to bottom out at -0.7%.
Home Price Expectation Survey: Decline of -0.3% in 2020
Fannie Mae: Increase of 0.4% in 2020
Freddie Mac: Increase of 2.3% in 2020
Zelman & Associates: Increase of 3.0% in 2020
National Association of Realtors: Increase of 3.8% in 2020
Mortgage Bankers Association: Increase of 4.0% in 2020

We can garner two important points from this list:

There is no real consensus among the experts.
No one projects prices to crash like they did in 2008.

Bottom Line

Whether you’re thinking of buying a home or selling your house, know that home prices will not change dramatically this year, even with all of the uncertainty we’ve faced in 2020.

To view original article, visit Keeping Current Matters.

Real Estate Still Holds the Title of Best Long-Term Investment

Jul 2, 2024

Homeownership has long been tied to building wealth—and for good reason.

What To Do When Your House Didn’t Sell

Jul 1, 2024

If you want an expert’s advice on why your home didn’t sell, rely on a trusted real estate agent.

Do Elections Impact the Housing Market?

Jun 27, 2024

While Presidential elections do have some impact on the housing market, the effects are usually small and temporary. For help navigating the market, election year or not, let’s connect.