The current economic recession and worldwide pandemic has had a big effect on the nation an its consumers. As a result it is very difficult to forecast and predict consumer behavior and how home prices will be affected.
In a normal scenario, this would be determined by a formula. Supply of homes for sale divided by the demand by homebuyers. Today, homebuyer demand is far higher than seller supply. Mortgage applications for new primary residence purchases is the highest it has been in 11 years while the inventory of homes for sale is at an all-time low. This normally would indicate an increase in home prices.
Some experts are skeptical that the current home buying motivation will be sustained.
Ralph McLaughlin, Chief Economist at Haus, says:
“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.”
Here is a list of what experts are predicting in terms of home prices:
- 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
Two things can be taken from this:
- There is no real consensus among the experts.
- No one projects prices to crash like they did in 2008.
If you are thinking of buying or selling, contact South Florida Real Estate Experts at Prestige Waterfront Realty by calling 954-830-7000.