Zillow predicts smaller homes and tighter inventory ahead

by Steve Randall11 Dec 2019

The return to more normal housing market conditions seen in 2019 is set to continue in 2020 according to Zillow.

The real estate firm says that millennials will dominate market trends as more of the generation reach peak homebuying age. That will likely mean smaller homes will be in demand.

Typical US homes have shrunk over the past five years, with the median size of a newly built single-family home down more than 80 square feet. This is driven by millennials’ preference for urban living and a move away from the large mansions that Baby Boomers coveted.

Fears of a 2020 recession are unlikely to be realized with strong economic fundamentals keeping the US economy resilient and supporting growth in the housing market.

Although home price growth is expected to weaken from the 4.7% annual growth seen in October 2019, a Zillow panel of economists and housing experts still expects increases of 2.8% from December 2019 to December 2020.

Mortgage rates
Low mortgage rates will continue in 2020, helping drive demand and fuel price growth in more affordable markets.

This should mean a rise in home sales despite for-sale inventory near historic lows.

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