The real estate market’s current trend is birthing different forecasts and predictions by various economists and other real estate companies. Zillow projected a balance in the market and an upward trend by this time next year. Although it predicted that, there will still be a drop in prices in the last quarter of this year. A drop of about 2 to 3% was predicted, followed by normalcy in the early months of 2021 and possibly an upward trend in the latter parts of next year.
Zillow considered some factors before coming up with this prediction. For instance, an estimated 4.9% reduction in the U.S GDP this year and an increase of 5.7% were factored into this prediction. Also, the results and statistics during the financial crisis in 2007-08 were compared with that of what is happening now. A similarity was found between the financial risks that occurred around March with the 2008 statistics results.
FACTORS TO CONSIDER
With the varying results recorded since March, it is looking impossible to make a perfect prediction of the market. For instance, the market started by recording a marked reduction in the number of sellers and listings, causing a price drop. Then around the latter part of April, it appeared as though the prices were increasing in some regions, even with a limited number of available properties. A turnaround happened in May, which saw more buyers interested in the market because of the introduction of 3D visualization by agents and home sellers.
The remaining months this year and the early parts of next year might still be difficult to predict because of some factors. The first is there might the pandemic might start a second wave, forcing people to stay indoors even more. This is because, as at now, there are no vaccines for the virus, and the more people are contracting the virus by the day. Putting this into consideration, sellers might not be interested in listing their properties any longer because few buyers are interested in them. The few buyers might even want to purchase the house at a lower price, which will not favor the seller in the long run.
Another factor being considered is the reduction in listings that comes with the colder months, which we are approaching. This is causing several investors to predict a continuous decrease in prices and listings until the end of the year. The only difference is the varying numbers being put up; while others say 10%, others say 15%.
The sellers’ record home sales and the lower mortgage rates that most buyers enjoyed in February appeared to cut short since the pandemic started. It is looking unlikely to return to that mark until the end of the year, although everyone is hopeful that this will not roll over to 2021. Investors can make hope on this likely outcome to buy some properties to gain from it by next year.