Big News from Zillow & Zillow's New 2023 Housing Predictions
Zillow has updated its 2023 Housing Predictions and it’s making waves in the real estate industry. While there is an expected increase in home values, there is also a predicted decrease in the number of homes sold, leaving many wondering what is causing this shift. With a shortage of supply and potential homebuyers sitting on the sidelines due to higher interest rates, the market is experiencing volatility. However, recent bank failures could change the game. We’ll look at the changes in Zillow’s housing forecast as well as how they will affect buying and selling a home in Huntsville, Alabama. Read until the end to find out big, breaking news from Zillow!
Zillow’s New Prediction on Home Values & Homes Sold
Zillow's changed its 2023 Housing Forecast, so what does that mean for both housing values and the number of homes sold? The Zillow Value Index, which had previously predicted a 0.2% increase, is now slightly up to .6%. That's basically still relatively flat across the country. A .6% increase means likely a decrease in the West, particularly California, areas like Boise, Idaho, and Seattle, Washington. A lot of the country will likely be flat with the South probably slightly increasing depending on what state you're in. Here in Huntsville, Alabama, we're still probably looking at relatively flat, maybe slight increases in prices over the next 6 to 12 months.
Zillow is predicting an increase in terms of home values, but they are expecting and predicting a decrease in terms of the number of homes sold. They were previously predicting about 4.6 million homes sold, they’re now decreasing that number by 300,000 homes nationally down to 4.3 million homes sold. This is about 30% or so down from the peak that we've seen over the last couple of years.
Fewer homes sold and prices are staying relatively flat, how is that happening? Well, we still have the supply shortage in this country and we have a lot of people sitting on the sidelines with this mortgage rate lockdown effect. Fewer homes are on the market and there are fewer buyers due to the higher interest rates.
How Will Bank Failures Affect Housing Predictions?
We do, however, have a big asterisk next to this report because this report came out prior to the big bank failures so I expect to see this report potentially updated over the next couple of months. The reasoning is, these big bank failures are causing the Fed to start a pause on rate hikes. They're signaling that there will potentially only be one additional rate hike.
With potentially only one more rate hike, what is that doing to the 30-year fixed rate? We started to see 30-year fixed rates start to come down with several banks as the ten-year Treasury has dramatically dropped. The reason that's important is that the ten-year Treasury typically mirrors what the 30-year mortgage rate is doing. We’re already seeing 30-year rates starting to drop and if they stay down, that will likely increase both the number of homes sold and the prices of homes as well.
The reason it will increase the number of homes sold is because there are so many shadow buyers. These are potential homebuyers that are sitting on the sidelines waiting to come into the market as rates get more affordable and as they are able to purchase their first homes.
A lot of millennials are sitting on the sidelines. Millennials were actually down in terms of the number of homes that they've bought in 2022, all due to higher prices and higher interest rates. As we see lower interest rates, expect to see these millennials in the marketplace again. Since we don't have adequate housing in this area, expect to see prices start to rise again.
Advice to First-Time Homebuyers in 2023
We met with a first-time homebuyer recently and we told this first-time homebuyer what we're telling all of our first-time homebuyers, rates are very volatile right now. If you're qualification and you buying that dream home or that first home you're looking to get into is conditional upon rates, then here's what I would do.
Rates are very volatile, go ahead and be sitting on go. Go ahead and know the type of homes that you're interested in, the areas that you're interested in, and the homes that you be interested in making an offer on. That way you're ready as soon as we hit rates that are in the high 5% range or whatever qualification you need to be able to qualify for that home. Be sitting there ready to take action because rates are going up and they're going down very frequently and you need to be ready when that time comes.
Zillow’s Big Announcement
Speaking of Zillow, we recently received a call from Zillow saying that we are now named one of the Best of Zillow! One of the ways that they calculate that is they survey YOU, the consumer, on your experience with Matt Curtis Real Estate. Thank you so much for providing great feedback to Zillow and helping make us one of the best of Zillow, not only here locally but nationwide.
Thank you so much, Huntsville, for doing that. Speaking of Zillow and Home Search, I encourage anybody that's moving to the area and wants to search homes based on their drive time commute to check out our drive time feature at mattcurtisrealestate.com. It allows you to plug in your employer and then the commute that you're looking for along with all the other search criteria that you have for your home and it'll spit out all of the homes that meet your drive time criteria.Matt Curtis on