Desperately needed home inventories are on the rise and are expected to come mostly from sales by existing owners, among a host of other sources – the smallest of which are foreclosures – according to a panel of real estate experts responding to Zillow’s latest survey on house price expectations. . The housing market is expected to remain stable as homeowners exit forbearance programs, while rents and vacant homes are not expected to increase significantly after the end of the federal moratorium on evictions.
“Now, with more confidence in their long-term housing decisions, we are seeing existing owners finally returning to the market as sellers, who will provide most of the inventory for sale over the next year or so.” , said Nicole Bachaud, economic data analyst. in Zillow. âThis is good news for many potential buyers, who should see more options to make their home search easier. Along with the expected moderation in price appreciation in the coming months, the market is starting to move towards a balance between buyers and sellers, although this middle ground is still far away. “
Panelists believe the biggest source of available home inventory will be existing homeowners who buy and move to another home, accounting for 39.7% of supply over the next year.
Inventories trended down through 2020 and into 2021 as housing demand took off, driven by the big shuffle, low interest rates and a demographic wave of generation buyers. Y and baby boomers. The combination of low supply and high demand pushed prices into new territories, reaching a record annual appreciation of 17.7% in August. Fortunately for depleted buyers, stocks are replenishing. Zillow’s August Market Report saw both inventory and the share of listings with declining prices increase for a fourth consecutive month.
In February, the accurately predicted panel this additional inventory would enter the market in the second half of the year, as existing homeowners become more comfortable listing their homes as part of a widespread vaccine distribution.
The panel expects foreclosures to be the smallest source of inventory available at 5.4%. Additional supply is should hit the market over the next few months as homeowners walk away from forbearance and some sell their homes, according to a previous Zillow study. The federal moratorium on foreclosures ended on July 31, and about 850,000 borrowers are expected to exit forbearance programs by November 2021.
However, the sharp appreciation in prices in recent years and very few loans with negative equity mean that open market sales are a realistic option for the majority of distressed borrowers. It’s different from 2008, when financial conditions and a sour housing market pushed many homeowners into involuntary foreclosure.
New construction is expected to be the second largest source of inventories at 22.5%. New home construction was slashed in 2021 due to a shortage of key building materials, but even despite setbacks it remained well above pre-pandemic levels.
Existing owners intending to rent, or not to buy again, are expected to contribute 9.6% of the supply, according to the panel.
In the rental market, given the expiration of the federal moratorium on evictions, evictions from Zillow projects will be about 1.5 times what they typically would have been before the pandemic.
After the moratorium expired on July 31, the Centers for Disease Control and Prevention imposed a new policy to prevent evictions in areas with high COVID infection rates. However, the Supreme Court blocked the new ban, leaving a number of tenants threatened with eviction. Zillow estimates that there will be more 485,000 deportation requests in September and October after the Supreme Court ruling, with 268,000 likely to be evicted – about 0.6% of the 43.9 million tenants in the United States
The vast majority of survey participants do not expect rents to change much as the moratorium ends. The largest group of panelists – 34% – said no changes are likely to happen, while 26% expect rents to rise slightly. In total, 14% of those polled said that rents would go down slightly or moderately. Predictions of a modest increase in rents were made by 20% of the panel, and those who believe rents will rise significantly were 6%.
When asked how rental vacancy rates would be affected, the largest share (38%) said vacancies would increase slightly due to the end of the moratorium, just ahead of forecasts that vacancies would not increase (37%) and beyond calls. that they would increase modestly (24%).
The number of at-risk tenants who will be evicted will be greatly influenced by the pace of distribution of federal relief funds. According to the US Department of the Treasury, only $ 5.1 billion of the $ 46.5 billion rental relief has been distributed by state and local governments as of August 25.
Experts surveyed expect nationwide home prices to rise 31.8% through 2025, the equivalent of an average annual rate of 5.7%, well below the current annual appreciation of around 17%.
âIn the United States, home appreciation rates and annual rent price increases are at historically high levels, and home price expectations are now the highest we have seen in 12 year history of this survey, âsaid Terry Loebs, founder of Pulsenomics. , the independent research company that carried out the survey. âThe bright side for would-be homeowners is that the worst of the housing supply crisis finally seems to be behind us, and most experts believe last year’s rapid price boil has started to lift. mitigate.”