House Prices Expected to Drop Amid COVID-19 Crisis
May 4, 2020
Home prices are traditionally immune to recessions, with the only national decline since the Great Depression occurring during the 2008 crash. Now, home prices are expected to fall nationally in the aftermath of the coronavirus.
Zillow is forecasting that prices are likely to fall by 2-3% this year. The real estate website based its forecast on proprietary data and estimates about 2020’s GDP. Though troubling, the estimated drop in prices will be considerably smaller than during the great financial crisis, where prices fell 27% nationally from their peak in 2006 to their trough in 2012.
Zillow also expects a big but short decline in home sales. Sales are expected to fall by 50-60% by the end of the spring, then begin to recover at a rate of about 10% each month through 2021.
Zillow also forecasts a more pessimistic possibility, where prices fall 3-4% and do not begin to recover until the end of next year, but notes only a 25% chance of this happening.