“The housing market has been incredibly hot for a very long time,” said Zillow Group CEO Spencer Rascoff at a LAWAC luncheon on September 12. Ten years after the financial crisis, more than half of American homes are worth more than they were at their 2007 peak. Rascoff said that Zillow data shows LA metro home values were up six percent over the last year, driven by limited inventory since 2007. That trend is starting to change though with inventory in LA up 13 percent year-over-year after 42 months of declining inventory, causing the market to begin to slow down.
Another contributor to the slowing market Rascoff pointed to was a decrease in foreign purchases. “There’s undoubtedly fewer foreign real estate purchases happening today than two or three years ago,” Rascoff said. He listed off three contributing factors, starting with the strong dollar. Another factor is China, which has started to enforce the crackdown on foreign outflows, making it more difficult to move money from China to the US. Lastly, Rascoff pointed to politics, saying, “It’s difficult to quantify this, but we think the general anti-immigrant political climate has probably made the US less attractive to foreign buyers.”
And what of the long-term future of the housing market? Millennials are often portrayed as being against buying homes, but the data at Zillow shows the opposite. “Millennials are buying homes, they’re just doing it five to seven years later than previous generations,” said Rascoff. One way Zillow will cater to millennials is streamlining the home buying, selling and financing process by become a one-stop-shop. “Today everything is accessible with the click of a button,” said Rascoff, “And although it would be a bit more complicated, we figured this consumer expectation would come to the housing market.” Zillow is currently buying and selling homes in four major US cities and recently acquired a mortgage company.