Weaker Home Prices Ahead | Zillow Downgrades 2025 Home Price Forecast

On The Market

BiggerPockets

News, Investing, Business, Education

4.8 • 820 Ratings

🗓️ 27 February 2025

⏱️ 31 minutes

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Summary

Only two months into 2025, Zillow has significantly changed its original housing market prediction. With rising inventory, suppressed buyer demand from high mortgage rates, and sluggish market sentiment, Zillow’s home price forecast has been downgraded. Why the change, and what data is leading Zillow to project little or no home price growth this year? Orphe Divounguy, Senior Economist at Zillow, is on to share. With a downgraded forecast, the question becomes: is the housing market leveling off, or could we be in store for home price dips? How will rent prices be affected with the massive wave of multifamily construction finally starting to taper off? With less supply coming online, will these units get absorbed, resulting in higher rents for single-family homes? Have we finally reached the supply-demand equilibrium, putting the housing market on pause? What’s the one thing that could reignite buyer demand and lead to home price appreciation? Or, is this the new normal, and with little interest rate relief in sight, are we headed for years of a stagnant housing market? We’re getting Orphe’s expert take! In This Episode We Cover Zillow’s new February 2025 housing market forecast (and the sizable home price forecast downgrade) Why home prices are stagnating, and the one crucial factor causing this Mortgage rate predictions and whether we’ll see some real rate relief this year Single-family and multifamily rent price predictions for 2025 (which will see the most growth?) What should investors do: sit on the sidelines or capitalize on current conditions? And So Much More! Links from the Show Join the Future of Real Estate Investing with Fundrise Join BiggerPockets for FREE Sign Up for the On the Market Newsletter Find Investor-Friendly Lenders Dave's BiggerPockets Profile BiggerPockets Real Estate 1083 - Feb 2025 Housing Market Update: Are Our Predictions Already Wrong? Zillow Home Value and Home Sales Forecast (February 2025) Grab Dave’s Book, “Real Estate by the Numbers” Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/on-the-market-299 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Zillow just released their February housing market report, and they are now predicting
0:09.4	much weaker home value growth and only slight increases in existing home sales for 2025.
0:16.5	So is the market already cooling off or just maybe leveling out a bit?
0:21.2	Today, I'm joined by Zillow's senior economist Orfe de Vungai, who will walk us through
0:26.5	these new projections.
0:27.8	We'll talk about everything from inventory shifts to mortgage rates and what it all means
0:31.9	for buyers, sellers, renters, investors, everyone.
0:35.6	I'm Dave Meyer.
0:36.6	Welcome to On the Market. Let's jump right in.
0:39.4	Orfei, welcome back to the show. Thanks for being here. Thanks for having me. It's so good to be back.
0:44.6	Yeah, it's always an exciting time. I mean, we always love talking to you, but one of the great things
0:49.6	about your work at Zillow is you guys are always updating your forecasts all of your data and sharing it
0:56.6	with the public. So maybe I could just ask you to start there. Tell us a little bit about your
1:01.7	most recent research and read on the housing market at the highest level. Yeah, totally. I mean,
1:08.2	we're seeing more sellers returned than we're seeing on the buyer
1:12.6	side at least, right? Yet, right? But I think that's kind of typical. You know, the housing
1:18.1	market tends to slow down in the winter and then home buying activity really heats up in the
1:23.2	warmer months when you get to the spring and you don't have all the snow out there. We did have a big surprise, though, at the end of the year, where we had two or three consecutive
1:32.0	months of upside surprises, both in terms of existing home sales, but also new home sales.
1:37.3	And so I think that that was really positive.
1:39.8	In fact, we just had a new home sales report this morning from the Census Bureau that showed
1:44.0	that even though new home sales declined in January, we just had a new home sales report this morning from the Census Bureau that showed that
	...

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