Housing market will ‘slow down a bit’ but prices aren’t expected to backslide: Zillow economist – Yahoo Finance
Zillow Senior Economist Jeff Tucker joins Yahoo Finance Live to discuss expectations for the housing market to cool off slightly in 2022 and what that means for homebuyers.
– 2021 marked the hottest housing market in US history, at least according to Zillow’s home value index. 2022 isn’t expected to shatter new records here, but our next guest says he still expects strong price growth and sales volumes to continue. Let’s bring in Zillow Senior Economist Jeff Tucker, joining us from Seattle today. Jeff, that’s going to come as a relief to a lot of homeowners who felt like they kind of got priced out, because they went so high. It’s certainly been a seller’s market this year, but how do you think things are going to potentially cool down come 2022?
JEFF TUCKER: Yeah, I think things almost have to cool down, because it was such an extraordinarily hot market in 2021. We had price growth on our index over 19%. And frankly, you know, other price indexes are showing similar annual appreciation. That’s the hottest on record. But the slowdown, you know, a slower pace of price appreciation, doesn’t do a whole lot of good for home buyers when you don’t actually expect prices to fall. We don’t expect to see any kind of backsliding on prices.
So things are going to slow down a bit, but one reason we don’t think prices are set to fall is that inventory is still so scarce. That’s kind of the barometer for the housing market. It tells how many options buyers have to choose from and how much competitive pressure sellers are feeling. We’re still about 38% below normal inventory levels for this time of year. That’s comparing back to 2019. We haven’t really made any progress kind of making up that inventory drought from– that began with the pandemic. So until that turns around, until we see more options for buyers, I don’t see much hope for seriously moderating or even more affordable prices for buyers.
– So the inventory may still be low, but I’d imagine there’s a lot of buyers who are looking at potential rate hikes saying, well, we want to lock in those rates now. Could that potentially lead to a cool down, if you can even call it that, maybe in the second half of the year, especially given that a lot of– one of the biggest drivers has been those mortgage rates?
JEFF TUCKER: Yeah, that’s right. I think the biggest potential headwinds for further price appreciation are from affordability, both on the level of how …….