SEATTLE, Sept. 21, 2021 /PRNewswire/ -- Desperately
needed housing inventory is on the rise and expected to come
primarily from sales by existing homeowners, among a host of other
sources — the smallest of which is foreclosures — according to a
panel of real estate experts responding to the latest Zillow® Home
Price Expectations Survey.1 The housing market is
expected to stay stable as homeowners exit forbearance programs,
while rents and vacancies are not expected to rise dramatically
following the end of the federal eviction moratorium.
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"Now with more confidence in their long-term housing decisions,
we are seeing existing homeowners finally returning to the market
as sellers, who will provide the largest chunk of for-sale
inventory in the next year," said Nicole
Bachaud, economic data analyst at Zillow. "This is welcome
news for many potential buyers, who should see more options to help
their home search. Along with the expected moderation of price
appreciation in coming months, the market is beginning to shift
toward a balance between buyers and sellers — although that middle
ground is still a far ways off."
Panelists believe the largest single source of available housing
inventory will be existing homeowners buying and moving to a
different home, comprising 39.7% of supply over the next
year.
Inventory trended downward throughout 2020 and into 2021 as
demand for homes took off, driven by the Great Reshuffling, low
interest rates, and a demographic surge of millennial and baby
boomer home buyers. The combination of low supply and high demand
pushed prices into new territory, reaching record-high 17.7% annual
appreciation in August. Fortunately for frazzled buyers, inventory
is recovering. Zillow's August market report saw both
inventory and the share of listings with a price cut rise for a
fourth straight month.
In February, the panel accurately predicted that additional
inventory would enter the market in the second half of the year as
existing homeowners became more comfortable listing their homes
under a widespread vaccine distribution.
The panel expects home foreclosures to make up the smallest
source of available inventory at 5.4%. Additional supply is
expected to come onto the market over the next few months as
homeowners exit forbearance and some sell their homes, according to
previous Zillow research. The federal foreclosure moratorium ended
on July 31, and roughly 850,000
borrowers are expected to exit forbearance programs before November
2021.
However, strong price appreciation over the past few years and
very few loans with negative equity mean open market sales are a
realistic option for the majority of distressed borrowers. That's
unlike in 2008, when financial conditions and a souring housing
market pushed many homeowners into involuntary foreclosure.
New construction is forecast to be the second-largest source of
inventory at 22.5%. New home construction has been weighed down in
2021 due to shortages of key building materials, but even despite
the setbacks has largely remained above pre-pandemic levels.
Existing homeowners intent on renting, or not buying again,
should contribute 9.6% of supply, according to the panel.
In the rental market, in light of the expiration of the federal
eviction moratorium, Zillow projects evictions will be roughly 1.5
times what they would typically have been before the pandemic.
After the moratorium expired on July
31, the Centers for Disease Control and Prevention imposed a
new policy to prevent evictions in areas with high COVID infection
rates. However, the Supreme Court blocked the new ban, leaving a
number of renters at risk of eviction. Zillow estimates there will
be more than 485,000 eviction filings in September and
October after the Supreme Court's ruling, with a projected 268,000
likely to be evicted — roughly 0.6% of the 43.9 million
renters2 in the U.S.
The vast majority of survey participants do not expect rents to
change much as a result of the moratorium ending. The largest
single group of panel participants — 34% — said no change is likely
to occur, while 26% expect rents to rise slightly. A total of 14%
of respondents said rents will fall either slightly or modestly.
Predictions for rents to rise modestly were cast by 20% of the
panel, and those believing rents will increase significantly
accounted for 6%.
When asked how rental vacancy rates will be affected, the
largest share of respondents (38%) said vacancies would rise
slightly as a result of the end of the moratorium, just ahead of
predictions that vacancies would not rise (37%) and beyond
calls that they would rise modestly (24%).
How many at-risk renters will be evicted will be greatly
impacted by the pace of distribution of federal relief funds.
According to the U.S. Department of the Treasury, only $5.1 billion of the $46.5
billion in rental relief has been distributed by state
and local governments as of Aug.
25.
Experts surveyed expect home prices nationwide to increase a
cumulative 31.8% through 2025, the equivalent of an average annual
rate of 5.7% — far below the current annual appreciation of about
17%.
"Across the U.S., home value appreciation rates and annual rent
price increases are at historically high levels, and home price
expectations are now the highest we've recorded in the 12-year
history of this survey," said Terry
Loebs, founder of Pulsenomics, the independent research firm
that fielded the survey. "The silver lining for aspiring homeowners
is that the worst of the housing supply crunch looks to finally be
behind us, and most experts believe that the past year's rapid
price boil has begun to simmer
down."
1 This edition of the Zillow Home Price Expectations
Survey surveyed 111 experts between Aug. 3
and Aug. 17, 2021. Panelists include economists,
researchers, analysts and other housing experts from academia and
the private sector. The survey was conducted by Pulsenomics LLC on
behalf of Zillow Inc. The Zillow Home Price Expectations Survey and
any related materials are available through Zillow and
Pulsenomics.
2 According to 2019 U.S. Census Bureau's American
Community Survey 5-year estimates
About Zillow Group
Zillow Group Inc. (NASDAQ: Z and ZG) is reimagining real estate
to make it easier to unlock life's next chapter.
As the most visited real estate website in the United States, Zillow® and its affiliates
offer customers an on-demand experience for selling, buying,
renting or financing with transparency and nearly seamless
end-to-end service. Zillow Offers® buys and sells homes directly in
dozens of markets across the country, allowing sellers control over
their timeline. Zillow Home Loans™, our affiliate lender, provides
our customers with an easy option to get pre-approved and secure
financing for their next home purchase. Zillow recently launched
Zillow Homes Inc., a licensed brokerage entity, to streamline
Zillow Offers transactions.
Zillow Group's brands, affiliates and subsidiaries include
Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™,
Zillow Closing Services™, Zillow Homes Inc., Trulia®, Out East®,
StreetEasy® and HotPads®. Zillow Home Loans LLC is an Equal Housing
Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
About Pulsenomics
Pulsenomics LLC (www.pulsenomics.com) is an independent research
firm that specializes in data analytics, opinion research, new
product and index development for institutional clients in the
financial and real estate arenas. Pulsenomics® also designs and
manages expert surveys and consumer polls to identify trends and
expectations that are relevant to effective business management and
monitoring economic health. Pulsenomics LLC is the author of The
Home Price Expectations Survey™, The U.S. Housing Confidence
Survey, The Housing Confidence Index, and The Transaction Sentiment
Index. Pulsenomics® , The Housing Confidence Index™, The
Transaction Sentiment Index™, and The Housing Confidence Survey™
are trademarks of Pulsenomics LLC.
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