Three newly published forecasts are offering a mixed picture of what the national housing environment will resemble during 2020.
Zillow took a look into the coming year and predicted there will be no recession, with economic and home value growth continuing into 2021, although possibly at a slower pace than in recent years. The Seattle-based company predicted home size will continue to shrink and mortgage rates will remain low, but sales will be on the rise despite inventory challenges.
"With the housing market stabilizing from the drama of the price recovery and the slowdown during 2019's home shopping season, we have a rare moment of calm to reflect on what housing might look like in the year to come," said Zillow Director of Economic Research Skylar Olsen. "If current trends hold, then slower means healthier and smaller means more affordable. Yes, we expect a slower market than we've become accustomed to the last few years, but don't mistake this for a buyer-friendly environment–consumers will continue to absorb available inventory and the market will remain competitive in much of the country. But while the national story is a confident one, housing in some manufacturing-heavy markets may see adversity. The struggle could be even more stark, since similarly affordable housing markets with a more balanced job profile may be 2020's rising stars."
NerdWallet also predicted a continuation of low mortgage rates and ongoing scarcity for affordable homeownership opportunities, but it also forecast more lenders will be elbowing their way into the first-time homebuyer market dominated by the Federal Housing Administration while the
iBuyer sector will increase its presence. Holden Lewis, NerdWallet’s Housing and Mortgage Expert, also pointed to potential changes in the home selling process.
“The real estate industry faces challenges that could upend the way homes are marketed,” he said. “One threat comes in an antitrust investigation by the Justice Department, which wants to know whether local Multiple Listing Services allow buyer’s agents to filter listings by commissions. If so, agents would be able to hide listings from you if, in your agent’s opinion, they offer commissions that are too low.”
Lewis also observed the ongoing class-action antitrust lawsuits that accused the National Association of Realtors (NAR) and several larger brokerages of strong-arming sellers into paying inflated commissions to buyers’ agents.
“An upstart real estate brokerage called REX is fighting the industry on another front,” Lewis continued. “REX doesn’t list homes on the MLS. Instead, it markets homes so they’re easily found on Google, Facebook, Zillow and Trulia, says Jonathan Friedland, a senior vice president for REX. Home sellers represented by REX don’t pay commissions to buyer’s agents. REX avoids listing homes on the MLS altogether. Meanwhile, there has been a trend in which local brokerages have listed homes on their websites but have withheld them from the MLS. In November 2019, NAR adopted a rule requiring homes to be listed on the local MLS within a day of being marketed elsewhere. These moves and countermoves are likely to continue into 2020 and future years.”
"Despite stronger housing demand, homebuilders continue to be constrained by a combination of regulatory changes after the housing bust of 2007 and lack of workers," said David Berson, Nationwide senior vice president and chief economist. "For 2020 we should continue to see a further modest rise in home construction to a new high for the expansion, although it is likely to stay well below the long-run demographic trend of 1.4 to 1.6 million starts per year."
Nationwide also offered its latest Leading Index of Healthy Housing Markets (LIHHM) index, which remained in positive territory, with majority of metro areas remaining stable over the past year and 66 regional markets showing improved scores.
"The U.S. economy remains firmly in the longest expansion in history, and we expect the housing market to continue to do its part in driving positive growth," said Berson. "Millennials, once held down by the worst job market since the Great Depression, are now in a position where they are the primary demographic driving housing demand."
