-

What are Future Home Prices Going to Look Like? Experts Have Some Answers.




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:
We can garner two important points from this list:
  1. There is no real consensus among the experts.
  2. No one projects prices to crash like they did in 2008.

What We Think

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.

Comments

Post a Comment

Popular posts from this blog

Economists Predict Recovery Will Begin in the 3rd Quarter

-
Image
With the U.S. economy on everyone’s minds right now, questions about the country’s financial outlook continue to come up daily. The one that seems to keep rising to the top is: when will the economy begin to recover ? While no one knows exactly how a rebound will play out, expert economists around the country are becoming more aligned on when the recovery will begin. According to the latest Wall Street Journal Economic Forecasting Survey , which polls more than 60 economists on a monthly basis, 85.3% believe a recovery will begin in the second half of 2020 (see graph below): There seems to be a growing consensus among these experts that the second half of this year will be the start of a turnaround in this country. Chris Hyzy, Chief Investment Officer for Merrill notes : “We fully expect the economy could begin to pick up in late June and July with a strong recovery in the fourth quarter.”  Also, five of the major financial institutions are also forecasting positiv...
Read more

The Summer Housing Market is on its Way. Are You Ready?

-
Image
As the health crisis started making its way throughout our country earlier this spring, sellers have been cautious about putting their homes on the market. This hesitation stemmed primarily from fear of the spread of the coronavirus, and understandably so. This abundant caution has greatly impacted the number of homes for sale and slowed the pace of a typically busy spring real estate season. Mark Fleming,  Chief Economist  at  First American   notes : “As more homeowners are reluctant to list their homes for sale amid the pandemic, the supply of homes available to potential home buyers continues to dwindle.” With many states beginning a phased approach to reopening,  virtual  best practices and health and safety  guidelines  for the industry are in place to increase the comfort level of buyers and sellers. What we see today, though, is that sellers are still making a very calculated return to the market. In their latest  Weekly H...
Read more