Inventory and first-time buyers won’t bounce back until 2024, according to Zillow’s Home Price Expectations Survey.
The survey polled a panel of housing experts who said they anticipate for-sale inventory levels will take two years to climb back to pre-pandemic levels.
Total inventory fell from a monthly average of just 1 million in 2021 and early 2022 figures aren’t looking any better, both down from 1.6 million units in 2018 and 2019.
The largest group of Zillow’s respondents (38%) expect inventory to reach 1.5 million units or more in 2024, though the second largest group (36%) predicted 2023.
“Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” said Zillow senior economist Jeff Tucker. “We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill.”
Respondents were split on when they expect the share of first-time buyers to reach pre-pandemic levels, with 26% saying 2024, 25% saying 2025, and 18% saying 2030.
The share of first-time buyers has dropped from 45% in 2019 to 37% in 2021. Nearly three in ten (29%) of Americans hoping to buy their first home aren’t sure if it’s a good time to do so, according to TD Bank’s First-Time Homebuyer Pulse. Seven out of ten are concerned about the economy, and 67% are concerned about their ability to afford a home.
“First-time homebuyers are feeling anxious and unprepared in this highly competitive housing market,” researchers wrote.
But Zillow’s respondents agreed that home price appreciation will overtake all inflation measures this year except energy, which they ranked first.
Pulsenomics founder Terry Loebs said the panel’s average projections for home price growth in 2022 have been revised upward, from 6.6% three months ago to 9% in this survey.
“Against the backdrop of tightening Fed policy and increasing mortgage rates, this more bullish outlook for home values suggests that home inventory shortages will remain the dominant price driver this year,” Loebs said.
“If price increases this year for homes, rents, energy, and food each exceed wage growth – as the panel expects – home affordability challenges will intensify further, especially for low- and moderate-income renters.”
Zillow economists forecast a 16.3% rise in typical home values from February through December.