This time around, she doesn’t foresee the housing bubble bursting like it did in 2008, but she also doesn’t expect the market to get easier for anyone anytime soon, she said.
“This is going to be a tough market, the norm is tough,” Zelman said during an Inman Connect online session with Kendal Bonner of eXp Realty. “It’s not going to be an easy market.”
If there is any sector that could have a crater effect on the economy at large, it’s commercial real estate, she added.
Zelman predicts that 2024 will look remarkably similar to 2023 in terms of sales volume.
“We’re not forecasting any type of severe downfall,” she said. “In fact, we think that ’24 will look not dissimilar, in terms of volume to ’23.”
With 2023 marked by high mortgage interest rates leading to low housing affordability and low inventory due to most homeowners feeling the “lock-in” effect, Zelman says she expects the high interest rate environment to persist.
“We should be ready to be living in a higher for longer environment,” she said.
Current demographics also paint a grim picture for future housing demand, she pointed out. Some of the demographic changes that affect household growths — births, immigration, and deaths — are all trending in the wrong direction for more household growth, with the death rate accelerating, the birth rate slowing, and immigration growing at a slower rate after years of stagnation.
“I think the demographics are clearly negative,” Zelman said.
Zelman also said that climate change, and its potential impact on home prices and homeowners insurance, offers a compelling value proposition that agents should be discussing with their clients, especially in markets in the South and West that have seen major influxes of new residents.
The bombshell commission lawsuits currently playing out also have the potential to put downward pressure on asking prices, Zelman theorized, depending on the outcome. If buyers find themselves responsible for paying buyer agent commissions, what will likely happen is buyers will demand discounts on asking prices, possibly causing home prices to come down across the board.
“The person listing their home is going to have to reduce the price enough that the buyer is going to say ‘Okay, that just gave me the 3 percent that I didn’t have,” she said. “It’s going to put pressure on home prices.”
For agents faced with this new reality, Zelman offered one piece of advice: Emphasize honesty.
“My advice to agents is to be as honest with your clients as possible,” she said. “This is going to be a tough market.”