This Spring will be “a fairly strong buying season” for the housing market, according to Zillow’s Chief Economist, Dr. Svenja Gudell. Here are some of the highlights of a recent DS News interview with Dr. Gudell by Brian Honea.
For the future, I think it would be good to see more investment in housing come through. Economic progress usually leads the housing market. We’ve seen a lot of housing lead the economy lately. It’s nice to have a strong housing market to help with the economy as a whole, because housing is a huge part of GDP growth and the overall welfare of the economy.
We’ve been in a tough spot because a lot of household formation has come through as rentals. We have many fewer people buying homes than they have in the past and many more making the choice to rent. We’re seeing a bunch of headwinds on the side of renters wanting to become homeowners such as saving for a down payment amid very high rent, being able to qualify for a mortgage, and actually finding inventory.
That last point will be a key point as we move into the selling season this year. There’s just very little inventory out there, and without having more inventory, it’s really hard to have a very strong season. Limited inventory will surely mean that prices will go up, and we will once again see fairly good home value appreciation with solid demand for housing. However, if you don’t have enough homes available to buy, then the existing-home sales won’t pick up as much, and eventually that will filter through into the GDP numbers as well.
I do think from the numbers we had last year that it will be a fairly strong buying season. We have a lot of leftover demand. We are continually undoubling households that doubled up during the housing bust, where students moved in together, or young professionals moved in together, or people moved back in with their parents. As those people move out of their parents’ basement and get jobs, those households will then decide that it’s a good time to buy because financially it makes a lot of sense for them to buy. Given the still-low inventory levels we’re seeing, that will continue to drive prices up. We’d like to see more sales than we will see, but I think price appreciation will be quite good going into the season.
