Zillow (NASDAQ:Z, ZG) has looked into the near future of the U.S. housing market and is forecasting some improvements related to inventory and affordability options for buyers.
“Inventory has been far below normal for a while, and though Zillow economists predict more homes will hit the market in 2024, inventory will remain much lower than pre-pandemic norms,” said the company in announcing its forecast. “Faced with limited choices, buyers will be willing to overlook small flaws, such as an outdated bathroom or kitchen.”
Zillow believed buyers in 2024 will face less competition from flippers due to the still-high costs of purchasing residential properties. Zillow’s latest forecast calls for home values to hold steady in 2024 – and mortgage rates are being forecasted to also hold steady.
But the 2024 forecast is also predicting the cost of home buying to “level off next year, with the possibility of costs falling if mortgage rates do.” But while this could create an improved environment for some buyers, “many households will still be priced out” – which would increase demand on single-family rentals next year.
“I expect the beginning of a long healing process to kick off in the housing market next year,” said Skylar Olsen, Zillow chief economist. “We know there are a huge number of households in prime home-buying ages waiting for the winds to turn in their favor. While still presenting challenges, the market will be better for buyers, with more homes to choose from and improved affordability. Many will continue to look toward rentals, and given renter demographics single-family rental demand in particular will be strong. Recent deliveries should keep rent growth down, and concessions high in that market, too. This is our breather year.”
