The 2021 housing market will be stronger than 2020

Right here is the fourth installment of our economist Q&A series, as we work to answer to the tip 2021 housing market questions. Every Tuesday in December, HousingWire interviewed a top economist in the HW+ Slack channel. The 2021 housing market forecasts like centered on the entirety from dwelling prices to mortgage rates.

On this installment, HousingWire interviewed Jeff Tucker, senior economist at Zillow, on his forecast for subsequent year. This text has been flippantly edited for size and readability. 

HW: You originate your commentary with a valorous prediction: The 2021 housing market will be stronger than 2020. What’s one of many ideal reasons for this forecast?

Jeff Tucker: Broad question to kick it off! We were protecting a shut stare on the decline in energetic inventory, which I accept as true with is the most knowledgeable leading indicator, and its movement this year has been nothing wanting jaw-losing. By Zillow’s count, there are a minimum of 1/3 fewer energetic listings now than this time final year, with even bigger shortfalls in a lot of metros and submarkets. I will give a instant preview of our upcoming breakdown of suburban markets namely, where we’re imminent 50% year-over-year declines in inventory.

That means an spacious shortfall of supply relative to inquire of. It took months to dig this inventory hole, so even though the rep waft of energetic listings turns around, it may perhaps perhaps perhaps perhaps grab months to dig our formulation out again. In the interval in-between, customers are competing over an extremely minute pool of alternate strategies, ensuing in a pair of-offer eventualities and very instant sales, in a vicious cycle of rising prices (virtuous for dwelling sellers, of course, except they’re attempting to interchange up!)

HW+ member: That may perhaps perhaps furthermore very effectively be a vastly bullish forecast for EHS in ’21. What’s the premise for it?

Jeff Tucker: Our forecast is 6.9 million homes for 2021. As a beginning level, that used to be most regularly the same annual number because the October 2020 SAAR scurry of sales, and clearly a limited increased than the November SAAR numbers that NAR shared at the moment time. Our optimism to retain or enlarge this fall’s scurry comes from the skill of more sellers coming out of the woodwork subsequent year, and the proof of more than a few pent-up inquire of on the customers’ facet.