Analysts are always attempting to predict where the housing market will go at a given point in time. For the last few years, the prices of houses have generally recovered from the Great Recession in many parts of the country. The past few years have seen more of a seller’s market, but some analysts are starting to predict that 2020 will be the year that the housing industry will turn into a buyer’s market.
What Is a Buyer’s Market?
Some economists argue that market equilibrium in the real estate industry is a situation where a local market has a six-month supply of houses available. This is estimated as the point in which supply meets demand. When the number of houses on the market is lower than the six-month need, a seller’s market is the result. The opposite is true when the local market has more than a six-month supply of homes on the market. This would indicate a buyer’s market. When there are more sellers than buyers, prices will tend to come down, or at least go up less rapidly, as sellers want to compete to unload their properties.
Where Is the Market Headed?
Back in August 2018, researchers at Zillow, a leading real estate website, believed sellers would have more leverage through 2019. However, three out of four economists surveyed in the Zillow research expected a shift to more of a buyer’s market in 2020 or later. Markets with lower housing inventories will take longer to shift over to a buyer’s market.
In recent months, it seems as though the appreciation of housing prices has slowed. However, it’s important to remember that the housing prices will vary based upon the location. For example, there are signs of higher housing inventories in Chicago while real estate is really booming in Dallas. A turning point from a seller’s market to a buyer’s market, or vice versa, will not take place at once throughout the entire country.
Different markets will shift at different times. Even during the Great Recession, there were some local markets that held up relatively well. Not every city did as poorly as Las Vegas during the last market downturn. This would indicate that more localized research is necessary to get a true understanding of the total housing market for 2020 and beyond.
This blog was originally published on Fourte’s website.