Real estate investors and homeowners can expect a bumpy ride in the months to come, with flat prices and social distancing keeping some homes off the market, new construction lagging, and a ragged economic recovery impacting everything from credit availability to where people want to live.
Those are some of the takeaways in a revised forecast issued last week by the economists at the listings website realtor.com.
"We started off with the potential for the best year in more than a decade for sales. But we're going to see ups and downs as the market grapples with an uneasy economy. This will affect buyers and sellers across the board," said realtor.com chief economist Danielle Hale.
"COVID-19 has really dramatically changed the way the housing market is going to perform this year," Hale added in an article the site posted Wednesday, May 13, about the revised expectations.
Sales a bit sunnier this summer
Perhaps the most positive projection in the forecast -- titled "2020 Market Predictions - COVID-19 Update" -- is for home sales to begin ticking up in late summer and fall, with millennials leading the way in satisfying pent-up demand.
But, the report says, expect home sales to be down 15% from 2019, with the worst happening now. Second quarter sales are expected to be down 25%.
Meanwhile, the U.S. Census Bureau and National Association of Homebuilders have already noted drops in housing starts, and the realtor.com economists agree, pegging that activity an 11% fall from last year.
And, "home prices are projected to flatten, increasing just 1.1% for the calendar year and possibly registering small declines by the end of 2020," the report said.
Pandemic plagues fall forecast
"Under normal market conditions, prices would be expected to skyrocket as inventory evaporates, but buyer demand is expected to see-saw throughout the year as secondary waves of coronavirus infections pop up throughout the U.S.," the report said.
"During these periods, sales are forecast to take a hit as sellers de-list properties and buyer demand abates," the realtor.com economists wrote.Indeed, many health experts foresee a resurgence in COVID-19 cases later this year. That's perhaps reflected in this observation from the listing site's article about the report: "Markets in smaller, more affordable cities and surrounding suburbs could be particularly brisk as folks re-evaluate the appeal of big city life during a pandemic.
"But," the economists add, "realtor.com also predicts the housing market will experience a second round of pain in the form of another downturn toward the end of the year."