{"id":182403,"date":"2025-04-25T12:00:58","date_gmt":"2025-04-25T18:00:58","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=182403"},"modified":"2025-04-25T12:02:19","modified_gmt":"2025-04-25T18:02:19","slug":"zillow-goes-full-housing-bear-in-latest-forecast","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/zillow-goes-full-housing-bear-in-latest-forecast","title":{"rendered":"Zillow Becomes Housing Bear in Latest Forecast"},"content":{"rendered":"\n

Zillow<\/a> made waves last week after issuing a surprising revision to their housing market forecast: They now expect national home prices to decline<\/a> over the next 12 months. That\u2019s a notable shift\u2014and <\/span>it\u2019s got<\/span> a lot of<\/span> investors asking questions. Is Zillow overreacting? Are other experts on the same page? <\/span>And more importantly, <\/span>if<\/span> a buyer\u2019s market <\/span>really<\/span> is forming, is that <\/span>actually<\/span> bad news for real estate investors?<\/span> Let\u2019s break it all down.<\/span><\/p>\n\n\n\n

From Modest Growth to a Predicted Decline<\/span><\/h2>\n\n\n\n

If you\u2019ve <\/span>been following<\/span> Zillow\u2019s monthly forecasts, you\u2019ve probably noticed a <\/span>steady trend downward<\/span>.<\/span> Back in January, they <\/span>were predicting<\/span> a modest 3% increase in home prices through early 2025. By February, that number dropped to 1.1%. In March, just 0.8%. And now? Zillow\u2019s latest model <\/span>is calling<\/span> for a -1.9% price decline <\/span>between March 2025 and March 2026<\/span>. Now, to be clear, this isn\u2019t a doomsday prediction. A 2% drop in home prices is a correction, not a crash. But it is significant, especially coming from a company that\u2019s been relatively optimistic <\/span>in the past<\/span>.<\/span><\/p>\n\n\n\n

What\u2019s Causing the Downturn?<\/span><\/h2>\n\n\n\n

So what\u2019s behind the shift? It comes down to two <\/span>basic<\/span> fundamentals: more supply and still-weak demand. New listings are up 15\u201320% year-over-year, which is good news for inventory-starved markets, but it puts pressure on prices. Meanwhile, affordability is still tight. <\/span>Mortgage rates have bounced back to the high 6s or even 7%, <\/span>and that\u2019s keeping a lot of<\/span> buyers on the sidelines.<\/span> Zillow\u2019s not calling for a crash<\/span>, <\/span>just a continuation of the slow-cooling trend we\u2019ve seen over the past several quarters.<\/span> And, as always, national numbers don\u2019t tell the <\/span>full<\/span> story.<\/span><\/p>\n\n\n\n

Zillow\u2019s city-level forecasts paint a more nuanced picture. The Northeast is still expected to see price growth, modest but positive.<\/span><\/p>\n\n\n\n

\"markets
ResiClub’s<\/a> Analysis of Zillow’s Report<\/figcaption><\/figure>\n\n\n\n

The Gulf Coast, parts of Texas, and Northern California could see steeper declines. <\/span><\/p>\n\n\n\n

\"markets
ResiClub’s<\/a> Analysis of Zillow’s Report<\/figcaption><\/figure>\n\n\n\n

Most of the country is flat\u2014somewhere in the -2% to +2% range. In other words, this is pretty much what I predicted late last year: A mixed bag of flat markets with a few hotter and colder pockets.<\/span><\/p>\n\n\n\n

Are Other Forecasts Saying the Same Thing?<\/span><\/h2>\n\n\n\n

Now, let\u2019s zoom out. Zillow is just one forecast among many. Fannie Mae still projects +1.7% growth. Wells Fargo is <\/span>a bit<\/span> more optimistic, expecting +3% growth via the Case-Shiller index. J.P. Morgan is also in that 2\u20133% range. So, while Zillow\u2019s -1.9% prediction stands out, most other forecasters <\/span>still<\/span> believe prices will rise modestly. <\/span>That said, Zillow\u2019s bearish call <\/span>does carry<\/span> weight, especially since many assume their models tend to skew bullish <\/span>to begin with<\/span>.<\/span><\/p>\n\n\n\n

Personally? I think Zillow\u2019s call is reasonable. <\/span>In fact,<\/span> I\u2019ve said for months that most markets will be broadly flat\u2014somewhere in the -3% to +3% range. So, a -1.9% national forecast doesn\u2019t strike me as alarmist. It fits the trend. And honestly, the trend is what matters. You don\u2019t need perfect precision to make sound investing decisions\u2014you need directional clarity. And right now, that direction is clear: softening conditions. Inventory is rising. Demand is fragile. Uncertainty is high. Those are facts.<\/span><\/p>\n\n\n\n

Where we go from here depends almost entirely on macro conditions. If inflation cools and interest rates stabilize? We might see a return to modest price growth. If rates stay high and economic uncertainty drags on? Modest declines\u2014like what Zillow is predicting\u2014are <\/span>totally<\/span> possible. But here\u2019s the most important thing: No one credible <\/span>is forecasting<\/span> a crash. <\/span>There\u2019s <\/span>just<\/span> not enough distress in the system.<\/span> Yes, a recession is possible. But a <\/span>crash<\/span> requires forced selling on a <\/span>wide<\/span> scale\u2014and <\/span>there\u2019s no evidence that\u2019s<\/span> happening.<\/span><\/p>\n\n\n\n

So\u2026are price declines even <\/span>bad<\/span>? <\/span>Depends<\/span> on who you ask. For sellers? Not great. For flippers<\/a> and BRRRR investors<\/a>? Tricky. For those obsessing over the paper value of their portfolio? Sure, it can sting. But for long-term investors? A buyer\u2019s market could be <\/span>exactly<\/span> what you\u2019ve been waiting for. <\/span>This<\/span> isn\u2019t 2021. The market isn\u2019t hot. But that creates opportunities. Motivated sellers. Negotiation leverage. Less competition. Maybe even a discount.<\/span><\/p>\n\n\n\n

My Strategy Moving Forward<\/span><\/h2>\n\n\n\n

I\u2019m personally looking for deals where I can buy 2\u20134% below market value. That cushions me against downside risk and sets me up to hold a valuable, income-producing asset for the long haul. As always, I look for properties with rent growth potential, zoning or regulatory upside, value-add opportunities, or location in a path of progress. <\/span>If<\/span> I can check 2\u20133 of those boxes<\/span>, I\u2019m buying<\/span>.<\/span> Even<\/span> if prices dip a little more. Because I\u2019m investing for the next 10\u201320 years\u2014not the next 10 months.<\/span><\/p>\n\n\n\n

Yeah\u2014price declines might sound scary. They always do. But if you zoom out and think strategically, this could be the start of a more favorable investing environment. Flat-to-down markets aren\u2019t the enemy. They\u2019re the setup.<\/span><\/p>\n\n\n","protected":false},"excerpt":{"rendered":"

Zillow made waves last week after issuing a surprising revision to their housing market forecast: They now expect national home prices to decline over the next 12 months. That\u2019s a […]<\/p>\n","protected":false},"author":108611,"featured_media":182096,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1091,8],"tags":[],"class_list":["post-182403","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-real-estate-trends"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/182403","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/108611"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=182403"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/182403\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/182096"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=182403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=182403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=182403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}