During the spring home buying boom Zillow made a big claim – home prices would would soar another 17.8% between February 2022 and February 2023.
Weeks later the Pandemic fizzled.. Zillow slashed its home price outlook.
In September, the outlook was revised down to 1.2%
Now Zillow expects the U.S. Home values to rise 1.4%
“Back in May, Moody’s Analytics chief economist Mark Zandi told Fortune that rising mortgage rates coupled with “overvalued” home prices would push the U.S. housing market into a housing correction. A housing correction being a period where the U.S. housing market—which got priced to 3% mortgage rates—would work towards equilibrium. In every market, that’d translate into a sharp decline in home sales. It’d also, Zandi said, put frothy markets at risk of home price corrections.
That’s exactly what we saw this summer: Home sales plummeted across the nation, and frothy markets in the Western half of the country also saw declining home prices.”
Zillow researchers write, “”Across the country, affordability challenges have pushed potential buyers to the sidelines. Of course, this demand destruction has been more pronounced in some markets than in others. Markets with the highest prices a year ago saw disproportionately larger declines in active demand in the 12 months that followed.”
Heading into 2023 Zillow predicts the home price correction will loose steam in some markets while it picks up steam in other places.
Both Knoxville and Morristown are predicted to rise 5% over the coming year.
