The housing market is expected to return to pre-pandemic, 2019 norms — at least in terms of inventory and the share of purchases made by first-time home buyers — by 2024, according to a panel of housing market experts polled in the latest Zillow® Home Price Expectations Survey.
The housing market is expected to return to pre-pandemic, 2019 norms — at least in terms of inventory and the share of purchases made by first-time home buyers — by 2024, according to a panel of housing market experts polled in the latest Zillow® Home Price Expectations Survey. [1]
The dwindling supply of homes for sale has been a proximate cause of the recent explosion in U.S. home values, which have risen by 32% in the past two years. Total inventory has fallen from a monthly average of 1.6 million units in 2018 and 2019 to just over 1 million in 2021, and monthly figures in 2022 are lower still.
In the survey, experts were asked what year they expect to see inventory return to at least a monthly average of 1.5 million units. The most optimistic 4% answered 2022, and a further 37% answered 2023. The most frequent answer, from 38% of respondents, was 2024, meaning a cumulative 79% of respondents expect such a restoration of inventory sometime between now and the end of 2024.
The pandemic ushered in record-breaking price growth alongside rent hikes that made saving for down payments even more difficult. As a result, the share of first-time home buyers dropped from 45% in 2019 to 37% in 2021, according to a Zillow survey of recent buyers.
We asked the panel of experts when they expect first-time buyers will again make up as great a share of home buyers. The most common response (26%) was 2024, followed by 2025 (25%), by which time, cumulatively, 63% of respondents expect the share of first-time buyers to regain its pre-pandemic level. Eighteen percent of the experts polled did not believe the share of first-time buyers will rise above 45% until after 2030, despite millennials — the largest U.S. generation ever — aging well into their prime home-buying years before that time.
The average expected home value growth for 2022 predicted by panelists was 9.0%, representing a major slowdown from the 19% appreciation observed in 2021, but faster than the 6.6% predicted for 2022 when panelists were last surveyed in late 2021.
Looking ahead, the most bullish quartile of respondents predicted prices would rise 46.5% between now and the end of 2026, while the most conservative quartile predicted a cumulative rise of only 10.3% in that time. On average, respondents are forecasting a 26.8% cumulative rise by the end of 2026, or a compound annual growth rate of 4.9% in the next (almost) five years.
[1] This edition of the Zillow Home Price Expectations Survey surveyed 109 housing market experts and economists between February 16 and March 2, 2022 to gather their predictions for the outlook of the housing market in 2022 and beyond. The survey was conducted by Pulsenomics, LLC on behalf of Zillow, Inc. The Zillow Home Price Expectations Survey and any related materials are available through Zillow and Pulsenomics.
