Looking into the new year, Zillow predicted that the ongoing inventory shortage will persist, with more existing homeowners opting to remodel and stay in place rather than try to elbow their way through tight markets with limited and expensive selections. Home prices will grow 4.1 percent next year, which will be particularly painful for first-time homebuyers in the nation’s more expensive markets.
Zillow also predicted that builders will finally respond to the inventory crisis by creating more new construction for entry-level homes. However, much of this construction will be in suburban markets, thus creating a new wave of suburban sprawl. The rise in new suburban constructed will be due primarily to higher costs and limited land options in urban centers.
“In most markets around the country, housing has become a game of musical chairs, and nobody wants to be the last one without a seat,” said Zillow Chief Economist Svenja Gudell. “Homeowners who are looking for a change will turn to remodeling and redecorating instead of selling their home and facing the challenges of being a buyer in a sellers' market. New homes will be designed to be particularly appealing to the Millennial and Boomer generations. Wide hallways can make it easier to move in, as well as make it easier to navigate a stroller or wheelchair through the halls. Large drawers will replace cabinets, making it easier to access everyday items that previously were hard to reach.”