“A 30% decrease will not happen because there isn’t enough inventory,” he says. “A crash happens with oversupply.” He believes the housing shortage will continue this year, with the supply balancing out by five years.
Will it become a buyer’s market?
Yun expects the seller’s market to continue, while housing inventory remains low. By five years, though, he foresees a balanced market, where neither the buyer or seller holds sway. Instead, the negotiating power between parties will be more equal and depend on the individual case.
Caroline Feeney, executive editor, HomeLight, feels the shift away from a seller’s market has already begun. According to a recent survey the company conducted, only 51% of HomeLight agents described their current local market as a seller’s market. She also expects a balanced market within a few years.
Where and what sort of homes will be built?
With hybrid work schedules becoming the norm and commuting no longer as relevant, Yun predicts that the suburban market will continue to be strong. Meanwhile, 55% of top HomeLight agents believe the markets that heated up the quickest during the pandemic (including Austin, Phoenix and Boise) are likely to be the first to cool down and see the biggest decreases during a market correction, says Feeney. Yun expects growth in areas with rising populations, namely the Carolinas, Florida, Texas and Tennessee. Backing up his prediction, 50% of new single-family construction is in the South, notes Nanayakkara-Skillington.
The number of single-family homes under construction has decreased over the last four months. In contrast, the number of multifamily homes under construction has increased over the last few years, says Feeney, who credits this growth in part to their lower price tags — apartments tend to be cheaper than detached houses — and the pressure on municipalities to relieve shortages and provide more affordable housing.
Still, with high mortgage rates and inflationary building material prices, Nanayakkara-Skillington expects the multifamily market’s growth to stabilize within a few years, with the number of new starts decreasing 8% in 2023, and another 5% in 2024.
Source: the inquirer