Market TrendsJenn Jones

A Letter from the Editors
By Svenja Gudell on Sep. 30, 2019
After years of widespread, often breakneck growth in the housing market, 2019 marked a definitive turning point: Rent growth stabilized, home value growth cooled considerably and the balance of power between buyers and sellers – long-dominated by sellers – began to slowly shift.
The Zillow Group 2019 Consumer Housing Trends Report is that examination, a tool intended to help a wide audience of journalists, policymakers, industry professionals and consumers identify emerging trends, quantify how different groups react to them and ultimately empower smarter housing decisions.
There are abundant differences among renters, buyers and home sellers, but what stands out in the data is a shared refrain: Finding and moving into a new home is stressful. Almost every home seller (95%) is stressed by some aspect of the process, whether that includes the uncertainty of selling in their desired window, getting the right price and/or worrying whether an offer will fall through. Renters and buyers share similar concerns over budget and timing, and a majority of both  make at least one sacrifice in order to make all the moving pieces fit.
The challenges faced by those with personal debt are also universally shared, impacting the type of home someone can afford to rent or buy, their timeline for buying, their ability to afford an adequate down payment and, ultimately, whether or not they are approved for a mortgage. More than two-thirds of renters (69%) have personal debt of some kind, along with 54% of homeowners (beyond their mortgage). A comfortable majority (58%) of home buyers with debt say they worried they wouldn’t qualify for a loan, and roughly a quarter of renters and buyers said their debt caused them to be denied home financing or a rental agreement at some point.
Even so, clear differences emerge among racial, socio-economic and generational lines. White renters reported smaller rent increases and were less likely to pay application fees than their black, Asian and Hispanic peers. Roughly one-in-five of the nation’s youngest renters get help from their family to pay the rent, more than double the share of the next-youngest generation. And perhaps owing to experience – or lack thereof – younger home sellers, particularly first-time home sellers, are more likely than their older peers to say that any given aspect of selling is stressful.
As the market continues to shift and evolve, so too does the number and variety of tools and technology available to renters, owners, buyers, sellers and their agents. The willingness and ability of different groups to embrace these new tools – in whole, in part or not at all – will go a long way in helping determine how the real estate industry itself can and should adapt to meet their needs and soothe their stresses.

 

In 2019, Home is as important to the American consumer as it has ever been – even as the ways and means involved in finding and affording it are drastically different than they were even a generation ago. We hope the Zillow Group 2019 Consumer Housing Trends Report helps illuminate both what has changed and what remains the same in real estate. We trust these insights will lend useful and grounding data to what is one of the most emotional, but also emotionally rewarding, life events: Finding Home in America.

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Zillows Predictions for the 2018 Housing Market

Slower home price growth, continued inventory issues and evolving design trends are ahead

If only we could stare into a crystal ball to see exactly what 2018 holds for the housing market. More inventory? Yes! Slower home price growth? Absolutely! Oprah giving everyone a free house? That would be a dream come true.

For now we have forecasts from top economists and housing experts. And Zillow chief economist Svenja Gudell offered hers on behalf of Zillow.

“We’re on the other side of the housing recovery, and the real estate market looks quite different than it did 15 or even five years ago,” Gudell said in a statement. “We have a huge generation entering the market. They really want to be homeowners, and they’re faced with an inventory crisis that leaves them with few options.”

“Builders won’t ignore this hungry market, and we’ll start to see a rise in new construction at the more affordable end, instead of all the luxury buildings we’ve seen lately,” she added.

“However, builders are also facing high costs, so instead of adding density in cities where zoning laws and land costs often preclude affordable building, we’ll see the suburbs grow and expand outward.”

Here are the six things Gudell expects to happen in 2018:

1. Inventory shortages will drive the housing market. Gudell says low inventory will continue to push up home prices and serve as a barrier for first-time homebuyers who struggle to save for a down payment.

Furthermore, this demographic of buyers will struggle to compete against more seasoned buyers who have profited from a home sale and know how to negotiate their way to the top.

Lastly, Gudell says there are 12 percent fewer homes to choose from nationwide than there were a year ago, and 51 percent of for-sale properties are in the top one-third of home values, which are out of reach for first-time buyers.

2. Builders will turn their focus to entry-level homes. Economists have said over and over again that increased residential housing starts, especially at the starter home level, are the key to bringing home prices down.

Housing starts have been well below the 50-year average of 1.2 million, but Gudell expects builders to finally hearken to the call of first-time and lower- to middle-income buyers yearning for more affordable options.

3. Millennials will move to the suburbs. It’s no secret that the majority of millennials would rather live in urban centers with access to a plethora of entertainment and shopping options and robust tech-centered job opportunities. But most millennials, especially those without help from parents, can’t afford to live in these areas.

Gudell says 25- to 34-year-olds will begin moving to the ‘burbs in search of more affordable home prices.

4. Many homeowners will remodel rather than sell. In addition to higher housing starts, experts have said more homeowners selling their homes would help alleviate low inventory issues. Well, homeowners, despite having high confidence about being in a seller’s market, will continue to stay still, says Gudell.

Instead of buying a new home, homeowners will invest in remodeling efforts to make their current homes feel and look brand new.

5. Baby boomers and millennials will drive home design. Baby boomers and millennials are driving the housing market, so it’s no surprise that Gudell says they’ll be driving home design trends in 2018, too.

New starts and renovated homes will feature designs that appeal to both millennials and baby boomers, such as wide hallways that can accommodate both strollers (for young families) and/or wheelchairs (for aging boomers).

Furthermore, homes will also be built using frameworks that make it easy to add elements later, including extra support beams behind shower walls to which grab bars can be added as older generations age in place.

6. Homes prices will continue to grow, but at a slower pace. 2017 has been full of record-breaking home price growth, with economists calling it nearly “unstoppable.”

Gudell says home prices are expected to climb 4.1 percent in 2018 — 1.1 percentage points higher than the “normal” annual appreciation closer of 3 percent, but slower than the current annual pace of 6.9 percent.