Fannie Mae is the Bear, Zillow is the Bull: How to Talk to Consumers About Conflicting Home Prices

Zillow just came out with a housing price forecast that is very different from Fannie Mae’s. 

If you missed Fannie Mae’s most recent forecast, here’s a quick recap: they remain bearish on home prices, forecasting a 1.2% decline in prices to finish out 2023 and additional year-over-year declines in all four quarters of 2024. 

Zillow, on the other hand, is bullish, expecting a 4.8% forecast over the next 12 months. 

With all these conflicting home price forecasts, how you can talk to consumers about where home prices are expected to go?

Byron Lazine answered that question on a recent episode of the Hot Sheet:

Zillow’s Home Price Forecast

Based on the Zillow Home Value Index (ZVHI), Zillow expects to see home prices increase in 390 of the 400 major housing markets. Across the United States, the forecast calls for a 4.8% increase in home values from April 2023 to April 2024.

In addition, Zillow identifies 37 markets where the expected price growth surpasses the average, with projected increases of 7% or higher during the same period. This data is illustrated in a chart featured in a recent article by Fortune.

How the Zillow Home Value Index Differs from Other Forecasts

When it comes to home prices, it’s clear that not everyone is on the same page. 

Along with Zillow, CoreLogic expects an increase in home prices— by 4.6% from March 2023 to March 2024. And Bank of America predicts flat growth, with a 0% increase in home prices in 2023. 

But as of now, more housing market analysts are on the side of Fannie Mae. 

Freddie Mac’s prediction, also released this week, expects home prices to fall 2.9% over the next 12 months (through Q1 2024), with an additional 1.3% decline over the 12 months thereafter. 

Other housing analysts that expect home prices to fall include:

• Mortgage Stanley: -4% decrease in 2023
• Moody’s Analytics: -4.4% decrease from Q4 2022 to Q4 2023
• Goldman Sachs: -6% decrease in 2023
• KPMG:  -8% decrease in 2023

With such a wide range of predictions, reaching a consensus on the future trajectory of home prices is no easy task. And even more challenging is trying to explain all these conflicting viewpoints to consumers.

What to Share with Clients

When faced with forecasts that call for a decline in home prices, real estate agents are often quick to remind the masses: without an increase of affordable housing inventory, it’s hard to imagine prices cooling. 

Of course, that doesn’t mean those forecasts should be disregarded. All data from reputable sources should be taken into consideration. 

It’s important to break down all of the information—not just the predictions you agree with—because it can be confusing.

I just want to let a consumer know all of the different variables. This is what the banks are saying—the banks believe home prices are going to go down. They’re also being hit with the interest rate the hardest. Zillow, on the other side, believes home prices are going to go up in a big way…And in these 37 markets, they believe home prices are going to up 7% or more over the next 12 markets.

Byron Lazine

When communicating with consumers, visual aids such as charts and graphs, like the ones featured in Fortune, can be incredibly helpful. They make it easier for individuals to visualize the numbers and trends being discussed.

Moreover, it’s worth noting that home prices now vary more by location than they have in the past 14 years. This makes it even more crucial to compile and share local market data trends with consumers, ensuring they have a clear understanding of how the real estate landscape is shaping up in their specific area.