There’s no crystal ball that will let you know what’s ahead for the housing market, but that doesn’t mean there aren’t high-powered experts with strong opinions who are willing to share their insights.
Zonda and Bloomberg partnered on a market intelligence session Jan. 26 in New York, gathering analysts and economists to share their perspectives on one of the most confounding periods the housing market has seen.
“The market is signaling we are already in a downdraft,” said Gina Martin Adams, Bloomberg’s chief equity strategist. “The most controversial thing is are we falling into a recession or not? Frankly, for the equity market that question is too late. We have seen signs of a slowdown, and there’s no reason to bother waiting for a recession call.”
Here are five key takeaways from the event on what the current environment means for the U.S. housing market.
1. Don’t Look to the Fed for a Bailout
"If there’s no spark, there’s no fire. At this point of the cycle as we think about the U.S. economy slowing into potential recession, we’re thinking in the equity market of the easing process starting to begin. That’s the spark that lights the fire of the equity market’s reversal. But this is an unprecedented slowdown—if indeed there is a recession, it doesn’t look like we’ll see a big policy reversal. This time we don’t see that happening." —Gina Martin Adams
2. The Year Started Strong, but Caution Remains
"There’s been a lot of enthusiasm because we started January strong, so hearing a bit about how it’s game over and the market has bottomed, and everything can go back to normal to resume growth. I’d caution we haven’t seen the recession as it relates to job losses on the national level. Our base case is we fall into an economic recession, and the unemployment rate goes up. That doesn’t go against what the Fed says, but we know housing traditionally slows before the rest of the economy and comes back before the wider economy." —Ali Wolf, Zonda chief economist
3. Supply Chain Concerns
"In the old days, 'quick move-ins' were curse words in the industry. From 2020–2021, that term was like the dodo bird. Then buyers stopped buying, and those numbers went up. Take a breath—that doesn’t bother me. I’m most concerned about the supply chain. How long does it take to get a product to market—50% of builders said it takes a year or more. There were years when we could deliver in 60 to 70 days. That’s a massive problem over the next year." —Tim Sullivan, Zonda’s senior managing principal of advisory
4. Will Land Prices Change?
"The biggest question is, 'Are land developers going to move on land values?' They say their money is patient. They say they don’t need to move. That’s a big deal." —Mollie Carmichael, Zonda principal
5. News Cycles Don’t Help
"Sentiment around housing can’t be overstated. It’s been a huge contributor over the last six to nine months. Concerns about prices have been a very powerful force for buyers. A lot more than in past cycles—people have been in touch with the narrative in real time because of the proliferation of technology. They can look at their property value in real time, they can see negative headlines coming in. There’s the fear of buying at the top and concern about the broader economy and whether they’ll have a job in the next 12 to 18 months. On a positive note, sentiment has been starting to tick higher." —Drew Reading, Bloomberg Intelligence home building analyst
