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Trulia: This is how spring’s housing market will fare

Trulia says the market is in the early stages of a cyclical downturn

Although several reports indicate the housing market is projected to heat up this spring, recent data from Trulia suggests the industry is currently experiencing the early stages of a cyclical downturn.

“Cyclical housing market downturns occur roughly every 10 years, and they typically don’t happen overnight. Instead, they play out steadily over a few years, first showing up in sales volumes and later—usually a year or two later—in prices,” Trulia writes. “The housing market currently appears to be in the early stages of such a downturn: declining sale volumes and other market indicators indicate that it is cooling off, gradually pivoting away from the heated sellers’ market of recent years.”

And Trulia is right, home prices have been steadily depreciating since early 2018.

In fact, a recent report from CoreLogic indicates that since peaking at 6.6% growth in April 2018, home-price growth has continued to slow down.

However, despite these concerns, Trulia believes the housing market still has the ability to come out on top.

“The downturn we’re entering is inherently different from the previous one that saw home values plummet over 40%, and is likely to be mild,” Trulia writes. “Declining sale volumes will probably be followed by small declines in prices or possibly just a prolonged period of flat-to-modest housing price growth.”

As home prices continue to depreciate, Trulia predicts the housing market will shift in the favor of homebuyers.

“Sellers should expect price cuts to be more common, and properties will likely take longer to sell, causing inventory to build up,” Trulia writes. “More inventory, in particular, will slowly ease the competition between buyers, allowing them to negotiate with this spring’s sellers a shade more confidently.”

So, how will the housing market fare overall this spring? Well, Trulia says – just fine.

“There almost certainly won’t be a steep drop-off in home values like the one that occurred a decade ago, though the unfolding slowdown will be more palpable in some pricey markets,” Trulia writes. “Instead, any cooling in appreciation is likely to be moderate and happen gradually – likely showing up as either an extended period of flatter home price growth, or as a modest price decrease in the next couple of years.”

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