The forecast for the nation’s housing market is growing more pessimistic, with a slight drop in prices and a dramatic drop in sales now expected for 2020.
Real estate firm Zillow’s updated forecast predicts prices will fall nationally by 2% to 3% by the end of the year, with a gradual recovery beginning in 2021.
That is still a much better scenario than what happened to home values during the Great Recession, when they fell nearly 25% and took five years to recover.
The more jarring figure in Zillow’s new forecast is an expected drop in sales of as much as 60% nationally this year.
In the D.C.-area housing market, the slowdown in sales has already begun.
“The pace of pending sales, when we see a listing on Zillow go from ‘active’ to ‘pending,’ that is down 35% from the same time last year. So that is certainly fewer homes changing hands and fewer commissions for real estate agents right now,” Zillow economist Jeff Tucker told WTOP.
But prices in the D.C.-area market are holding up, and there is evidence that sellers expect them to going forward.
“Prices have not begun to fall. Even list prices. So, sellers are not taking as pessimistic of a view on what demand will look like. So far, the real estate market in D.C. is looking quite resilient,” Tucker said.
Until March, spring was expected to be the hottest home shopping season in years, with record-low inventory and mortgage rates and high buyer demand.
Damage done by the coronavirus pandemic may be short-lived in the housing market.
Zillow predicts a recovery that will look like a check mark, with sales building at a pace of about 10% each month through the end of 2021, and a steady recovery in prices throughout next year.
Zillow notes a recent uptick in new listings and pending sales and increased use of tech tools that enable social distancing for buyers and sellers.
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