BiggerPockets Real Estate Podcast Summary
Episode: Price Cuts Ahead: Zillow Downgrades 2025 Housing Market Forecast
Release Date: April 24, 2025
Host: Dave Meyer, Head of Real Estate at BiggerPockets

Introduction

In this insightful episode of the BiggerPockets Real Estate Podcast, Dave Meyer delves into Zillow's recently downgraded housing market forecast for 2025. The episode explores the implications of this shift for real estate investors, compares Zillow's predictions with other major forecasters, and offers strategic advice for navigating a potential buyer's market.

Zillow's Revised Forecast

Dave Meyer opens the discussion by highlighting Zillow's significant update to their housing market forecast. Historically known for their comprehensive monthly predictions, Zillow has revised its outlook for the period from March 2025 to March 2026, now anticipating a national housing price decline of 1.9% (02:15).

Dave Meyer (02:15): "Zillow is now predicting price declines, at least on a national level. They think housing prices are going to fall -1.9%."

This marks a notable shift from Zillow's previous forecasts, where just a month prior, they expected a modest growth of 0.28% to 0.8%. The downward trend is part of an ongoing adjustment over recent months:

• January: Predicted a 3% growth
• February: Revised to a 1.1% increase
• March: Further lowered to a 2.8% decline
• April: Now at a -1.9% forecast

Trend in Zillow’s Predictions

Meyer underscores the consistency in Zillow's revised forecasts, attributing the changes to foundational shifts in the housing market rather than transient anomalies.

Dave Meyer (03:45): "This is basically the continuation of a lot of trends that we've been seeing and talking about in the housing market for the last several months, or really even the last several years."

Key factors influencing Zillow's downgrade include:

• Increased Supply: A rise in housing inventory, with new listings up by 15-20% nationally.
• Affordability Constraints: Elevated mortgage rates, now in the high sixes to low sevens, limiting buyers' purchasing power despite demand.

Regional Forecasts: Winners and Losers

While the national outlook is slightly negative, regional forecasts reveal a more nuanced picture. Zillow identifies specific areas poised for growth and others facing steep declines.

Areas Projected for Growth:

• Atlantic City, New Jersey: +2.4%
• Kingston, New York: +1.9%
• Rochester, New York: +1.8%
• Knoxville, Tennessee: Notable growth in this non-New England area.

These regions, primarily in the Northeast, are expected to see modest appreciation, aligning closely with inflation rates.

Dave Meyer (06:30): "The fastest growing market as of right now is Atlantic City, New Jersey, that is projected to rise 2.4%. You see places like Kingston, New York, at 1.9, Rochester, New York, at 1.8."

Areas Facing Significant Declines:

• Louisiana Markets:
  • Lake Charles: -9%
  • New Orleans: -7.6%
• Texas and Other Regions: Additional declines concentrated in Texas, Northern California, Arizona, and Colorado.

These projections, particularly the sharp declines in Louisiana, signal potentially risky markets for investors.

Dave Meyer (08:10): "These are really concerning numbers. This is not the type of correction that you necessarily want to be investing into unless you have a well-formulated strategy."

Comparing Zillow with Other Forecasters

Dave Meyer's analysis extends beyond Zillow, evaluating predictions from other major forecasters to provide a comprehensive market outlook.

• Fannie Mae: Projects a 1.7% increase in housing prices for 2025.
• Wells Fargo: Anticipates the Case-Shiller Index to rise by 3%.
• JP Morgan: Also forecasts a 3% growth.

Meyer notes that most of these forecasts were made before recent economic disruptions, such as the Liberation Day tariffs, suggesting that future updates could align more closely with Zillow's cautious stance.

Dave Meyer (12:45): "The majority of forecasters still think that housing prices are going to go up this year... it's important to remember to take what Zillow is saying with a grain of salt."

Dave Meyer's Analysis of the Forecast

Aligning partially with Zillow, Meyer discusses his own expectations for the housing market amidst ongoing economic uncertainties.

Dave Meyer (14:30): "I predicted a softer housing market, and I think that trend is exactly what's happening here."

He anticipates a relatively flat national market, with most regions experiencing between -3% to +3% price fluctuations. Meyer's perspective emphasizes the importance of trend direction over specific numbers, especially given the volatile economic landscape influenced by tariffs, inflation, and potential recessions.

Implications for Real Estate Investors

Meyer explores what a potential 2% national housing price decline means for different stakeholders in the real estate market:

• Sellers: May face challenges due to increased competition and the need to lower prices.
• Flippers: Could encounter difficulties with appraisals and refinancing.
• Long-Term Investors: Might find opportunities to acquire undervalued properties.

Dave Meyer (18:15): "Buyer’s markets allow for negotiation. They create more motivated sellers. They can make properties more affordable."

Despite the challenges, Meyer reassures that a 2% decline does not equate to a market crash, emphasizing the difference between a correction and a severe downturn.

Dave Meyer (17:50): "Zillow nor I, nor any credible source that I have seen, is pointing to any sort of crash. We do not see signs that that is anything more than just sort of a fringe unlikely case."

Strategies for Investors in a Buyer's Market

In response to the shifting market dynamics, Meyer outlines strategic approaches for real estate investors:

1. Seek Below Market Deals: Aim to purchase properties at 2-4% below market value to mitigate potential declines.

   Dave Meyer (19:10): "If you can buy below list price, that protects you from risk of future price declines."

2. Focus on High-Quality Assets: Prioritize properties with strong fundamentals, such as rent growth potential, zoning flexibility, or strategic locations.

3. Long-Term Perspective: Maintain a focus on long-term wealth creation, viewing current market fluctuations as opportunities rather than obstacles.

   Dave Meyer (21:00): "Looking past short term fluctuations and trying to acquire great assets for long term wealth creation."

Conclusion

Dave Meyer's comprehensive analysis offers a balanced view of the current housing market landscape. While Zillow's downgrade signals caution, the broader array of forecasts and regional variations provide a nuanced understanding. For real estate investors, the emerging buyer's market presents both challenges and opportunities. By adopting strategic purchasing practices and maintaining a long-term investment horizon, investors can navigate potential price declines and capitalize on undervalued assets.

Dave Meyer (22:10): "Those who can see past those short term fluctuations can really set themselves up for long term success."

Key Takeaways:

• Zillow's Forecast: Predicts a 1.9% national housing price decline for 2025.
• Trend Analysis: Consistent downward revision in Zillow’s forecasts over recent months.
• Regional Variations: Modest growth in Northeast regions; significant declines in Louisiana and Texas.
• Other Forecasters: Majority still predict modest price growth, though economic turmoil may influence future updates.
• Investor Implications: Buyer's market presents opportunities for strategic acquisitions; focus on quality assets and long-term growth.

For detailed insights and actionable strategies, listening to the full episode is highly recommended.

This summary is based on the transcript provided and reflects the discussions held in the episode. For more information on real estate investing or to subscribe to updates, visit BiggerPockets.