The housing market is beginning to shift in favor of buyers. In recent months, a number of key indicators have revealed that the market is slowing down, and one real estate executive agrees.
The housing market “is starting to slow a little bit,” said Zillow CEO Spencer Rascoff at the Yahoo Finance All Markets Summit Thursday. According to Rascoff, home values were up 9% in the past 12 months. However, in the next 12 months values are forecast to rise by 6%-7%, Rascoff said, adding that the levels are still at an “incredibly high rate of appreciation.”
The latest S&P CoreLogic Case-Shiller national home price index results won’t be out until Sept. 25, but the most recent available results also reveal the market cooling down. The index recorded a 6.2% annual gain in June, down from 6.4% a month earlier, and the 20-City Composite posted a 6.3% annual gain — the slowest monthly increase in two years for the 20-City index.
Meanwhile, the National Association of Realtors reported Thursday morning that existing home sales have fallen 1.5% during the past 12 months. Last month, there were 1.92 million existing homes for sale, up from 1.87 million a year ago.
No signs of a crash
More than half of the country’s homes are worth more than they were at peak of 2007-2008, said Rascoff. But that should not be concerning. Rascoff said Zillow data does not forecast that we are headed for a crash but it does indicate a slowdown — that may be good news if you’re looking to purchase a home. By 2020, we’ll start to see a shift from a sellers’ market to a buyers’ market, said Rascoff, adding that for the past five years it was better to be a seller.
In fact, we’re already starting to see things change in certain markets like New York City and Los Angeles. According to Rascoff, in Los Angeles we had 42 months of declining inventory and last month inventory was up 13% year-over-year.
Rascoff attributes the slowed activity in these markets to a reduction of interest from foreign buyers.
“The dollar is strong — that’s made U.S. real estate more expensive,” he said. “Part of it is the anti-immigrant political tone which has caused Chinese buyers to look to Europe and other parts of the world instead of U.S. — and part of it is prices have gotten so out of whack because home values appreciate so much that other asset classes start to look attractive.”
Amanda Fung is an editor at Yahoo Finance.