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Zillow: Home Prices to Fall Up to 3% Amid Virus

Zillow: Home Prices to Fall Up to 3% Amid Virus
(Oleg Doroshin/Dreamstime)

By    |   Tuesday, 05 May 2020 11:39 AM

Zillow warns home prices will plunge 2% to 3% this year amid the seemingly endless coronavirus chaos.

The real-estate listing company also predicts a very fast 50-60% decline in home sales, which would bottom by the end of the spring and recover at a pace of about 10% each month through 2021, CNBC explained. 

As a comparison, home prices dropped just more than 27% nationally during the Great Recession, from their peak in 2006 to the trough in 2012, CNBC said, citing the S&P Case-Shiller Indices.

“While our internal and external data currently point to a bottom in real estate transactions at the beginning of April 2020, we are watching for signs of either a renewed contraction or other indicators of a slowing recovery,” the Zillow report stated.

The real estate listing company notes that it is basing its forecast on proprietary data and a baseline prediction of a 4.9% decrease in U.S. GDP in 2020 and a subsequent 5.7% increase in 2021, CNBC said.

“Housing fundamentals are strong -- much more so than they were leading into the Great Recession -- and that bodes well for housing in general,” Svenja Gudell, Zillow’s chief economist, told CNBC.

“Despite the difficulties, we’re seeing several signs that there is still a good amount of demand for housing, and buyers, sellers and agents are growing more comfortable moving transactions forward where possible.”

Gudell cited technology that is helping buyers shop for and close on homes at a distance amid the coronavirus pandemic.

Meanwhile, other housing projections aren't quite as gloomy, but are far from robust.

According to the March CoreLogic Home Price Index and HPI Forecast, home prices are projected to grow at an annual rate of 0.5% from March 2020 to March 2021. That’s a significant slowdown, considering home prices as measured by CoreLogic increased nationally at an annual rate of 4.5% between March 2019 and March 2020, Barron's explained.

The residential housing market was on the precipice of its spring season — one of the busiest times for home sales — when the coronavirus crisis hit the U.S., Barron's said.

Despite a robust winter season, home sale activity started to dwindle in mid-March, as the virus spread and states entered lockdowns to try to prevent its spread.

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Zillow warns home prices will plunge 2% to 3% this year amid the seemingly endless coronavirus chaos.
zillow, home, prices, coronavirus, housing, pandemic
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2020-39-05
Tuesday, 05 May 2020 11:39 AM
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