Prices are projected to drop 3%, while sales will nosedive this spring.
The real estate market in Southwest Florida and across the country will feel the impacts of the coronavirus pandemic well into 2021, several industry experts said this week.
Zillow estimated a 2% to 3% decline in home prices through the end of this year, with a recovery dragging into the third quarter of next year.
The real estate website also forecast an up to 60% plunge in U.S. home sales in the current quarter compared to the end of 2019. Sales will bottom out this spring, and the recovery will look like a checkmark, with transactions building about 10% each month through the end of 2021.
Meanwhile, data provider CoreLogic on Tuesday predicted annual home price growth of just 0.5% — down sharply from its 5.4% forecast in January.
Home prices in the Sarasota-Manatee region rose 3.1% over the year in March, trailing the 4.2% average gain posted throughout Florida and the 4.5% nationwide, CoreLogic said.
That was the 128th lowest increase in single-family home prices among the 403 metro areas studied.
Home prices in Sarasota-Manatee remain 10.75% off of their pre-recession peaks.
During the first three months of 2020, Sarasota-Manatee existing home sales were 9% ahead of last year. Prices were up 6.8% to a median $315,000.
Zillow said its projected steep drop in sales was spurred by overall economic uncertainty and the industry adjusting to public health orders that shut down or hindered the ways transactions have traditionally been done.
Until March, this spring was expected to be the hottest home shopping season nationwide in years, with record-low inventory and interest rates, and high buyer demand fueled by an increasing share of millennials entering prime first-time homebuyer age.
Those underlying dynamics still exist to fuel the recovery, Zillow said, and the effect on prices will be modest compared with the nearly 25% drop and five-year recovery that defined the the housing-led Great Recession.
"Much uncertainty still exists, particularly with some states beginning to reopen and experts warning of a possible second wave of the coronavirus in the fall," said Svenja Gudell, chief economist at Zillow. "However, housing fundamentals are strong — much more so than they were leading into the Great Recession — and that bodes well for housing in general.
"Despite the difficulties, we’re seeing several signs that there is still a good amount of demand for housing, and buyers, sellers and agents are growing more comfortable moving transactions forward where possible. For those who need to sell, buyers are out there, and there are ways to embrace technology and practice social distancing to ensure a safe process," Gudell said.
The Sarasota-Manatee area ranked 128th lowest for the annual increase in single-family home prices among the 403 metro areas studied by CoreLogic.
"Home prices for March reflect transactions negotiated primarily in the previous two months, prior to the implementation of the shelter-in-place policies," said Frank Nothaft, its chief economist. "The first quarter GDP results showed that the country entered a recession in March. Unemployment claims have reached record highs, and this economic environment will further impact the housing market into the foreseeable future."