It’s that time of year when real estate experts pull out their crystal balls and make some new year predictions. We’ll be turning to our own California Listings expert agents over the next few weeks to get their hot takes, but first, Zillow is out with some predictions of its own.
Affordability is top of mind for many, and the analysts over at Zillow anticipate that prices will continue to improve from their pandemic peak, albeit slowly. Zillow expects national home values to remain relatively flat next year, and even fall in the most affordability-challenged markets. That means group purchases will continue to be an attractive option for buyers.
Per the report, Zillow found that among successful recent homebuyers, 18 percent had purchased along with a friend or relative who wasn’t their spouse or partner, and 19 percent of prospective homebuyers intended to buy with a friend or relative in the next 12 months. For both groups, affordability and qualifying for a mortgage were cited as the top reasons for buying together.
Where some of those buyers may pick up homes is a bit surprising, as Zillow predicts the Midwest will emerge as a new hot spot for homeowners. Mortgage costs as a share of income are still within healthy, sub-30 percent levels across the region, allowing first-time buyers to take the plunge. Lower rents and home prices in these areas make it easier to save up for a down payment, the report notes.
For those that aren’t in the market to buy, new construction rentals are also looking to be a popular option in the new year. According to Zillow, the number of multi-family units to start construction each month has fairly steadily increased, reaching 8 percent up from pre-pandemic in October. Elevated multi-family permits also point to a strong vote of confidence in continued demand for rental units despite looming recession fears.