From June 2021 to June 2022, home prices in the US rose roughly 18.8%, an increase much larger than any 12-month period that led up to the 2008 housing crash. Over the past few months, home prices and demand have witnessed a cooldown thanks to increasing inflation, interest rates, and marching mortgage rates.
Despite the changing picture in the real estate markets and numerous analysts predicting more pain, Zillow, a US real estate marketplace, came out with a revised housing market trend for the next 12 months, shared on Twitter by Graham Stephan, a real estate investor, on October 18.
Namely, the revision now foresees home prices in the US rising by 1.4% over the next 12 months, with certain areas of the US experiencing higher growth and some seeing a decline.
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Aggregated view of the country
Zillow forecast represents an aggregated view of the entire country, the graphic shared of the ‘hot zones’ shows that growth will, however, not occur in each neighborhood and that results may vary significantly.
Earlier, Moody’s experts predicted a correction in the housing markets, which actually took place, especially in the Western part of the US, where home sales plummeted, and home prices declined, as reported by Finbold a few weeks ago.
Regional markets
According to Zillow, regional markets, more sensitive to mortgage rates, saw declines, such as Seattle and San Francisco.
“Across the country, affordability challenges have pushed potential buyers to the sidelines. Of course, this demand destruction has been more pronounced in some markets than in others. Markets with the highest prices a year ago saw disproportionately larger declines in active demand in the 12 months that followed.”
It seems that Zillow is then expecting the rate hiking cycle to be over in the next 12 months, as well as mortgage rates to either come down or stay slightly elevated, as currently, the slowdown is still in swing, mostly thanks to mortgage rates.
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