Will the Housing Market Be Better in 2024?
- Experts in a recent Zillow Research survey believe the inventory of housing to return to pre-pandemic levels by the end of 2024.
- Despite soaring mortgage rates pushing down demand for homes, real estate prices are still sky-high.
- Home sales have started to decline however, with some sellers even lowering their asking price, leading some to suspect an impending housing market cool-off.
While there are plenty of signs that housing demand is declining, economists everywhere continue to theorize how long it will take to truly see home prices cool-off. Will the housing market ease in the next few years?
Many home-buying experts seem to think so. In a recent Zillow survey, the majority of panelists expect home prices to ease between now and 2024.
The primary issue plaguing the U.S. housing market is fundamentally supply and demand. Homes are simply not being built at a rate fast enough to match their sky-high demand. For context, the stockpile of available homes in the country is currently around two-months worth. In a normal housing environment, the U.S. typically has a five month or higher inventory of homes.
As such, despite the highest mortgage rates in 13 years, and rapidly falling demand for homes, the housing market has remained red hot. Some suspect that further rate hikes, possibly compounded by a recession will be enough to cool down prices. Others feel the housing market is likely to continue growing, but at a much slower rate.
The housing market is, in some sense still recovering from the Covid-19 pandemic. When the pandemic hit, both buyers and sellers were sent into a frenzy, largely due to record-low mortgage rates. Add in a general slow-down in home construction the past few years, has led to the currently shored-up state of the housing market.
In the long-term, raising the supply of homes remains one of the only foolproof methods of lowering prices. In that regard, the future may be bright for would-be homebuyers.
According to Zillow Research, the supply of homes may not catch up to historical levels until around 2024. In a survey of housing experts, the majority believe home inventories will reach pre-pandemic levels by the end of 2024.
In the survey, experts were asked what year they expect to see inventory return to at least a monthly average of 1.5 million units. The most optimistic 4% answered 2022, and a further 37% answered 2023. The most frequent answer, from 38% of respondents, was 2024, meaning a cumulative 79% of respondents expect such a restoration of inventory sometime between now and the end of 2024.
It’s difficult to predict the future, especially amidst the rampant uncertainty present today. With that said, it’s clear that help is on the way for first-time home buyers, sooner or later.
Jun 24, 2022, 4:55 pm EDT, article here