After rapid pandemic-era growth in 2021-2022, the housing market has stabilized, avoiding a price crash. Zillow’s report states home values now rise like pre-pandemic. Rent growth is also steady. Buyers face high costs but less competition, aiding planning. Sellers wait, holding onto pandemic-low mortgage rates, though rates might drop. Affordability, worse over the years, is unlikely to greatly improve.
Zillow’s Senior Economist Jeff Tucker remarked that the housing market is stabilizing post-pandemic. Price appreciation has normalized, yet buyers still contend with high costs and competition, notably for affordable homes in less expensive areas.
Initial projections for a 0.7% 2023 home value decline shifted to a 5.5% growth, defying expectations of a post-pandemic housing crash. Low mortgage rates cushioned values, dissuading homeowners from moving due to higher rates.
The drop in supply has surpassed reduced demand. Long-term, inflation decrease might lower mortgage rates, but they won’t likely return to pandemic lows. Unfortunately, rising prices and rates have almost doubled mortgage costs from $875 (2019) to $1,800. High competition and limited listings slowed sales. Zillow predicts 4.2 million home sales in 2023, the lowest since 2010. Yet, new construction is bridging the gap as developers seize the chance, ramping up speed. Home values grow at a historically standard pace amid cost pressures and buyer limitations.
Renters who’ve faced steep price hikes and market turbulence can welcome the return to regular growth. Zillow’s rent report cites “average” rent growth: a 4.1% YoY increase and 0.6% monthly rise, aligning with pre-pandemic norms. Buyers can anticipate reduced competition and price upticks after the bustling summer season, while stable rent and home price growth aid mortgage planning. A Zillow survey reveals a potential influx of existing homes, with 23% of homeowners mulling over sales in the next three years, compared to 15% last year.