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Zillow Economist: Here’s what’s changing home prices for your local housing market in 2023

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Only one housing bull remains: Zillow.

Not only does Zillow disagree with the “home price improvement” narrative, the Seattle-based home listing site thinks the pandemic is the housing boom. some gas left in the tank. Between July 2022 and June 2023, Zillow predicts that US home prices will increase by another 7.8% (scroll down to find the metro-level predictions). This is well above the 4.6% average annual appreciation it has posted since 1987.

Research groups such as Zelman & Associates, Capital Economics, and John Burns Real Estate Consulting believe that the country is approaching a decline in home prices. The spiked mortgage rates, in his view, “overvalued” the US housing market. This begs the question: why does Zillow stay so fast?

A lot of it boils down to supply. Between the first week of January and the first week of July, inventory levels on Zillow.com jumped 18% — from 546,800 listings to 642,800 listings. Even with that jump, we’re still in a historically tight market. Inventory is down 54% from the 1.4 million active listings we had in July 2019. As long as inventory remains scarce, it is unlikely that current home prices will drop.

That said, this latest Zillow forecast marks another downside correction. In the face of weak housing data, Zillow lowered its year-over-year home price outlook from 9.7% to 7.8%. This is the fourth consecutive month that Zillow has issued a downward revision.

“The housing market is rapidly rebalancing from arguably the strongest sellers market in decades, with increasing inventory and easing competition for homes facing significant affordability challenges. Rebalancing continues given the current macroeconomic headwinds. is expected to remain,” the Zillow researchers wrote.

Nationally, Zillow expects 7.8% house price growth over the coming 12 months. But regionally, it will vary—a lot.

Of the 911 regional housing markets that Zillow economists analyzed, 906 are predicted to see rising home prices between July 2022 and June 2023. Zillow is expected to experience year-over-year declines in only five markets. The biggest projected drop is 6.4% in Greenville, Miss.

In the coming year, Zillow predicts that home prices will increase by 5% or more in 741 markets. Whereas 136 markets are projected to see a 10% or more increase in home price year-on-year. In Athens, Ga. (10.3% forecast growth) includes markets such as; Durango, Colo. (10.3%); Granada, Miss. (10.3%); Fort Myers, Fla. (10.2%); and Morristown, Tenn. (10.2%).

Keep in mind that some of this home price hike has already been baked in. At the end of data collection, domestic transactions lag behind. Many of the home sales that took place in August and September actually happened in June and July.

Mark Zandi, chief economist at Moody’s Analytics, doesn’t share Zillow’s rosy outlook.

In the coming year, Moody’s Analytics forecasts that US home prices will remain unchanged. This will be the lowest level of house price increase since 2011. But this is at the national level. At the regional level, Moody’s Analytics estimates that nearly half of the country is facing a fall in domestic prices.

earlier this week, Good luck Reached out to Moody’s Analytics to get access to their latest proprietary housing analysis. Researchers at the financial intelligence firm calculated how home prices are likely to change in more than 400 regional housing markets between the fourth quarter of 2022 and the fourth quarter of 2024.

Of the country’s 414 largest housing markets, Moody’s Analytics predicts that 204 regional housing markets will see an increase in home prices over the next two years. Meanwhile, Moody’s Analytics expects domestic prices to fall in 210 markets. The sharpest declines, Zandi says, will come in housing markets like Boise and Austin that are significantly “overvalued” relative to underlying economic fundamentals. If a recession occurs, prices in those markets may see a drop of 15% to 20%.

Want to stay updated on the US housing market? Follow me on Twitter @NewsLambert,

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