Housing Shortage Is Biggest Obstacle, Zillow CEO Says

 

"A housing market in the doldrums has been hurt by volatile mortgage rates, but a severe shortage of available homes is the most critical obstacle for would-be buyers, Zillow Group Chief Executive Jeremy Wacksman said.

"Homes are just not trading nearly as much as they could, which contributes to making it tougher for buyers," Wacksman said in an interview Thursday.

Zillow estimates the U.S. housing market is short by about 4.5 million homes.

Regulatory hurdles and other obstacles to development at the local level stymie growth in home supplies, and many areas are struggling to make housing affordable. New challenges may arise if President Trump fulfills pledges to raise tariffs and removes millions of undocumented immigrants, many of whom work in construction.

"Not to oversimplify, but you really can boil the housing affordability crisis down to an availability crisis," Wacksman said. "Getting more homes available is going to be ultimately what starts to unstick the housing market."

Years of underdevelopment following the Great Recession reduced the number of opportunities to become a homeowner. The issue was exacerbated during the pandemic when a buying spree inflated home prices, and later on efforts to tame higher inflation that sent mortgage rates sharply higher. These high mortgage rates -- once again above 7% -- have discouraged people who otherwise might want to sell the houses they own.

Wacksman, who became CEO of the home-listing site in August, said this means that, even if interest rates are cut and mortgage rates follow suit, buyers still face limited choices.

This was reflected by the sale of only about 4 million homes last year, compared with 5.5 million to 6 million sales in a more normalized environment, Wacksman added.

Zillow's economists forecast a slight increase in home sales and more modest home price appreciation in 2025.

Baked into its outlook is little to no action by the Federal Reserve that would bring down mortgage rates.

"You're going to need to see more than one or two rate cuts to really see the mortgage market move. And that'll help on the margin with affordability," Wacksman said.

But any subsequent demand would run into limited supply, potentially pushing prices higher and offsetting any benefits from a cut, he added.” [1]

1.  Housing Shortage Is Biggest Obstacle, Zillow CEO Says. Denny, Jacob.  Wall Street Journal, Eastern edition; New York, N.Y.. 24 Jan 2025: B4.