The Spring Market Is Starting Now

Competition for housing is so high, the spring market is starting now
The severe shortage of homes for sale is upending the sales calendar for the whole housing market. Spring has historically been the busiest buying season, but as competition for homes heats up across the country, January is the new April. Spring starts now.

“As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier,” said George Ratiu, senior economist at realtor.com. “With housing inventory across the U.S. expected to reach record lows in 2020, we expect to see this trend continue into the new year.”

Home price gains had been shrinking in the first half of 2019, but those gains began to pick up again in September and continued in October, according to the latest S&P CoreLogic Case-Shiller Home Price Indices. Price increases are broadest on the lower end of the market, while they are softening slightly on the high end.

With more buyers jumping into the market in January, this year’s spring market will likely see even fewer homes for sale. Current homeowners are reluctant to give up what they have, given how pricey the market is now, so it is up to the nation’s homebuilders to ease the supply crisis. They are increasing production slowly, but have not fully focused on the lower end of the market, where supply is leanest.

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Next Housing Recession in 2020

Next Housing Recession in 2020, as predicted by Zillow

The housing market in the U.S. could enter a recession in under five years, with online real estate company Zillow predicting that it will happen in 2020.

In a research report in which Zillow polled 100 real estate experts and economists about their predictions for the housing market, it disclosed that nearly half of all survey respondents said the next recession will commence in 2020, with the first quarter of the year cited the most as to when the recession will start. The main culprit for the housing recession: monetary policy.

What Zillow Thinks

Zillow is a popular website for aggregating real estate price information and gauging market sentiment for homebuyers and sellers. In this research report, several Zillow experts weighed in on the results.

"As we close in on the longest economic expansion this country has ever seen, meaningfully higher interest rates should eventually slow the frenetic pace of home value appreciation that we have seen over the past few years, a welcome respite for would-be buyers," said Zillow senior economist Aaron Terrazas in the research report. "Housing affordability is a critical issue in nearly every market across the country, and while much remains unknown about the precise path of the U.S. economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn."

Zillow Survey Insights

If the survey respondents' predictions prove true, the current economic expansion will be the longest ever recorded. While a housing collapse ushered in the Great Recession of 2008 and 2009, most survey respondents don't think a downturn in the economy will be centered on the housing market this time around. They think the Federal Reserve's actions when it comes to interest rates will be the biggest reason for the looming recession. After all, if rates go up, it will be more costly to take out a mortgage, shutting some buyers out of the purchasing process. They noted that, if the Fed raises rates too quickly, it could slow down the economy and thus lead to a recession. 

Zillow pointed out that, less than a year ago, survey respondents were more concerned with geopolitical issues, citing a crisis on that front as the most likely cause of a future recession. Those worries are now below monetary policy concerns. Other concerns are focused on a trade war with China, a stock market correction, and unexpectedly high inflation. Those same respondents expect the housing market to continue to grow, with home values expected to rise 5.5% this year. At this time a year ago, the real estate experts thought home values would increase 3.7% this year.

"Constrained home supply, persistent demand, very low unemployment, and steady economic growth have given a jolt to the near-term outlook for U.S. home prices," said Pulsenomics founder Terry Loebs, which conducted the survey for Zillow. "These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetite of prospective home buyers."

KEY TAKEAWAYS

• The U.S. housing market has recovered from the 2008–09 financial crisis, with home prices exceeding the pre-collapse valuation in many areas.
• Despite a record bull market over the past decade, the housing market in the U.S. could enter a recession in 2020, according to Zillow.
• This prediction is based on their own outlook combined with results from a survey of homeowner sentiment.

article source:  https://www.investopedia.com/investing/next-housing-recession-2020-predicts-zillow/