The long-term prognosis is more optimistic than many think, economists from Zillow and Windermere said during a panel at Inman Connect Now on Wednesday.

While the pandemic’s impact on the economy can be nerve-wracking for homeowners, the long-term prognosis is actually more optimistic than many think, according to economists from Zillow and Windermere during a panel at Inman Connect Now on Wednesday.

When coronavirus cases first started spiking in the U.S. and businesses ground to a halt, many people compared it to the 2008 housing market crash — a comparison that Skylar Olsen,  Zillow’s director of economic research, called inaccurate at Inman’s inaugural virtual real state conference.

Skylar Olsen

“If you look at the pending sales numbers, you’re looking at falling off a cliff significantly,” said Olsen, referring to the drop in new sales that came after March. But Olsen argued that “we’re watching recovery happen as we speak” as economies open up and pent-up demand for housing accumulates. In part due to low inventory, tight credit and low mortgage rates, there is still a high number of people looking to buy a home.

Technology has also protected many people, both by allowing some to continue working remotely and others to continue looking at and buying homes virtually. While Zillow initially estimated housing activity to drop by anywhere from 50 to 60 percent, they have now updated the estimates to be at somewhere between 40 to 50 percent. While pending sales are still more than 12 percent below what they were in 2019, recovery is already on the horizon.

“Economic support at this time is incredibly significant in terms of unemployment benefits, in terms of small business loans,” Olsen said. “Hopefully all of that will keep us from having significant foreclosures that would cause the home crisis to fall significantly like it did last time.”

Zillow

Matthew Gardner, chief economist at Windermere, said that homebuying activity in one half of the year will be drastically different from the other — an initial plunge due to the pandemic may be followed by a spike.

“It is going to be a story, or a tale, of two halves to the year,” Gardner said, adding that younger and first-time buyers may be especially hesitant to buy a home right now. Nonetheless, pent-up demand may cause sales to bounce back in the second part of the year and go up by as much as 13 percent in 2021. Year-over-year, he expects things to be about equal.

A headshot of Matthew Gardner

Matthew Gardner

“Demand is going to be interesting because of supply issues that are going to be pervasive but we’re not in 2008,” Gardner said, adding that the low number of homes on the market could create affordability problems even if prices drop. “This is a health crisis, not a housing crisis.”

Gardner predicts mortgage rates could drop to as much as 2.5 percent and inspire many to buy a home. While supply and affordability problems could prevent many from doing that, a home is still considered to be the ultimate form of stability and financial cushion — one in four homes with a mortgage in America have more than 50 percent equity.

“Our stock portfolio by 20, 30, 35 percent but have home prices dropped at all?” Gardner said. “Housing can potentially attract a lot more people just given its resiliency and its stability.”

Email Veronika Bondarenko

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×