Despite the drop in demand, home prices remained relatively stable due to low inventory. But Zillow now predicts a 2-3 percent drop in prices through the end of the year and a 60 percent decrease in overall sales. The housing market will recover, but Zillow forecasts that it will take until the end of 2021 to be back to 2019 levels for prices, home sales, and sale volume. The real estate company made three models of what might happen to the housing market after the pandemic subsides: an optimistic, medium, and pessimistic scenario. Find out which one they think is most likely to occur.
The continued economic fallout from the spread of COVID-19 has introduced immense uncertainty into the housing market as consumers step back from large purchases and social distancing puts a chill on necessary market services. As a result, Zillow expects home prices will most likely fall 2%-to-3% through the end of the year from pre-coronavirus levels, and home sales to fall as much as 60%, before both begin to slowly recover to baseline levels by the end of 2021.
The latest forecasts, based on published and proprietary macroeconomic and housing data, also include more pessimistic or optimistic projections based on the duration of the pandemic and the depth of its impact on the broader economy.
The forecasts center around a baseline prediction of a 4.9% decrease in United States GDP in 2020 and a subsequent 5.7% increase in 2021. Under the baseline scenario, we expect: