The outlook for home sales this year depends on which domino falls first — potential buyers getting tired of paying
Housing experts and economists queried for the latest Zillow Home Price Expectations Survey were split on predictions for year-over-year sales growth in 2022: 41% said sales would grow, while an equal number expect a slowdown. The remaining 18% think sales will remain the same.
"In America's frenzied pandemic-era housing market, buyers and sellers have both defied expectations: Buyers have forged on in the face of record-fast price appreciation, and homeowners have steadfastly demurred from cashing in on this selling opportunity," Jeff Tucker, senior economist at Zillow, said in a press release. "The outlook for home sales in 2022 hinges on which side yields first."
For the pessimists, worsening home affordability was cited as the most important reason for a sales decline for 54% of the respondents, while
On the other side, among those expecting increased sales activity, 51% stated it would come from additions to the inventory of
Nearly everyone surveyed expects home price appreciation to slow relative to last year's record-breaking pace. However, the average of their long-term projections remains among the most bullish outlooks in the survey's history, Zillow said. On average, panelists expect home values to grow another 6.6% this year, and by 23.5% over the coming five years.
The optimists expect more than 37% cumulative home value appreciation through 2026, while the pessimists believe they will rise by less than 8% over the same period.
"Although a handful of experts foresee a modest price correction on the horizon, none expect a crash, even as the confluence of unusual forces impacting U.S. housing markets continues to generate significant uncertainty," said Terry Loebs, the founder of Pulsenomics, which conducted the survey of 106 housing market experts for Zillow between Nov. 15 and Nov. 29.
The forecast from the Zillow survey for the next 12 months is slightly more bearish than one from collateral valuation firm Veros Real Estate Solutions. Its fourth quarter 2021 forecast expects prices to rise by 6.8%.
The third quarter forecast for the upcoming 12 months expected a 7% gain for that period, and that was similar to its second quarter outlook.
"Though many have been forecasting 'gloom and doom' since early 2020, Veros has been consistently saying that prices would be accelerating rapidly, which they have," Eric Fox, chief economist of Veros Real Estate Solutions, said in a press release. "Nothing has changed in that assessment other than we are seeing rapid levels of price increases stabilizing and slowing down slightly in 2022."
Even Odessa, Texas, which remains the city with the lowest expected price growth, now is on the positive side, with a 2.2% value increase over the next 12 months. Back in the second quarter, Veros expected price depreciation of 0.8% for this market during the coming year.
