Home price appreciation is slowing down, but experts believe we still won’t see the housing market flip in favor of the buyer until around 2020, according to a Q3 2018 Zillow Home Price Expectations Survey, conducted by Pulsenomics.
The survey, which asked 100 real estate economists and experts for their predictions about the U.S. housing market, found that the the declining inventory for 42 consecutive months, along with a faster annual home-value appreciation has created a seller’s market over the last several years.
However, with home price appreciation slowing and price cuts occuring in some areas, a buyer’s market may occur within the next couple years. But even with slower appreciation, rates are still above the historic average, leading most survey respondents to agree that the market will flip to buyers in 2020 or later.
A little less than half of respondents, 43 percent, believe 2020 is the year the housing market become a buyer’s market, while many believe the midwest will shift to a buyer’s market even faster. Many believe the midwest may flip in 2019, leaving the rest of the country to flip in 2020 or later.
"For the past several years, home sellers held all the cards at the negotiating table, fielding multiple offers while buyers faced stiff competition and a fast-moving market," said Zillow Senior Economist Aaron Terrazas. "Conditions are starting to show signs of easing up, but the effects of years of limited construction still linger. Inventory is still falling on an annual basis, and home values are growing well above their historic pace. Although these trends are starting to lose their edge, it is far too soon to call it a buyers market."
Home prices are expected to increase by 5.9 percent by the end of 2018, with many survey respondents increasing their predictions.
"While ongoing supply constraints are reinforcing the floor on home prices right now, the experts' forecasts still imply the joists will start to crack sometime next year, and result in sub-three percent annual home-value appreciation in 2020 and beyond," said Pulsenomics Founder Terry Loebs. "For the first time, a majority of the experts said that there is downside risk to their long-term outlook for home values nationally––and they outnumber experts who assigned upside risk to their forecasts by more than a three-to-one ratio."
Find the full survey results here.