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37 Journal OUTLOOK: BUYERS AND INVENTORY WILL RETURN BY 2024 Now is a great time to own a home, but not so much if you are trying to buy one. First-time buyers are fighting a war on multiple fronts, trying to balance rising home prices and interest rates with near record low inventory of 870,000 units in February, a 1.7 month supply. But looking ahead, Zillow predicts that the market will return to some semblance of "normal" not seen since 2019 by the year 2024, as they expect inventory to rebound by that point and a fresh crop of first-time homebuyers will return to the market to snap it up. ese predictions come by way of a new survey called the Home Price Expectations Survey which consists of "109 housing market experts and economists" polled on various topics between Feb. 16 and March 2, 2022. e survey was commissioned by Zillow and conducted by Pulsenomics, LLC. "e dwindling supply of homes for sale has been a key driver of the recent explosion in U.S. home values, which have risen 32% in the past two years," Zillow said. "Total inventory has fallen from a monthly average of 1.6 million units in 2018 and 2019 to just over 1 million in 2021, and monthly figures in 2022 are lower still." According to the responses in the survey, 12% of respondents believe that the market will return to pre-pandemic levels and see inventory levels equal 1.5 million units by 2025. Others are more optimistic: the largest group of respondents believe that the market will return to pre-pandemic levels in 2024 (38%) while others believe that the large-scale recovery will occur even sooner in 2023 (37%). Four percent believe that the economy will see inventory totaling 1.5 million by the end of 2022. "Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond," said Zillow Senior Economist Jeff Tucker. "We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill." e breathtaking speed at which home prices have appreciated last year has also warded off first-time buyers as they deal with saving for a larger down payment (to keep pace with appreciation) and their own rent hikes which eat into their monthly budget. "We asked the panel of experts when they expect first-time buyers will again make up as great a share of home buyers. e most common response (26%) was 2024, followed by 2025 (25%), by which time, cumulatively, 63% of respondents expect the share of first-time buyers to regain its pre-pandemic level," Zillow said. "Eighteen percent of the experts polled did not believe the share of first-time buyers will rise above 45% until after 2030, despite millennials—the largest U.S. generation ever— aging well into their prime home-buying years before that time." "Against the backdrop of tightening Fed policy and increasing mortgage rates, this more bullish outlook for home values suggests that home inventory shortages will remain the dominant price driver this year," said Terry Loebs, the founder of Pulsenomics. "If price increases this year for homes, rents, energy, and food each exceed wage growth—as the panel expects—home affordability challenges will intensify further, especially for low- and moderate-income renters."

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