The inventory crisis gripping America’s housing supply will most likely let up in 2024, with some experts forecasting a longer wait, according to a new survey released Thursday by Zillow.
Thirty-eight percent of housing market experts polled by the listings portal Zillow believed that the housing market will return to 2019 levels by 2024 — at least in terms of metrics like inventory and the share of first time buyers in the market, Zillow said in a news release.
“Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” Zillow Senior Economist Jeff Tucker said in a statement. “We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill.”
Total inventory has fallen from a monthly average of 1.6 million units per month in 2018 and 2019, to just over 1 million per month in 2021. While 38 percent of experts polled expected 2024 to be the year total inventory returns to 2019 levels, 36 percent were more optimistic, marking 2023 as the year things would settle down.
The shrinking supply of homes on the market has been a key driver of skyrocketing housing costs in markets across the nation, with just 729,000 houses listed for sale in March according to Zillow listing data, all but shutting out first time home buyers and sending rent costs through the roof as renting becomes the only option for many Americans, making saving for a down payment even more difficult.
With the share of first time buyers on the market dropping from 45 percent in 2019 to just 37 percent, 26 percent of experts polled by Zillow pointed to 2024, while 25 percent pointed to 2025 as the year they expected the share of first time buyers to return to 2019 levels.
In the immediate future, experts predicted home values and rents to continue trending upwards, with Zillow economists predicting a 16.3 percent increase in typical home valuations between February and December 2022.
“Against the backdrop of tightening Fed policy and increasing mortgage rates, this more bullish outlook for home values suggests that home inventory shortages will remain the dominant price driver this year,” Pulsenomics founder Terry Loebs said in a statement. “If price increases this year for homes, rents, energy, and food each exceed wage growth – as the panel expects – home affordability challenges will intensify further, especially for low- and moderate-income renters.”