Will Your House Drop in Value This Year? Zillow Thinks So — 6 Things To Do Now
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G. Brian Davis
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Amen Oyiboke
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Zillow released its July housing market report on July 21, projecting that average home prices will decline by 2% by the end of 2025.
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New listings have outpaced home sales, which has raised inventory for sale by 17% year-over-year. MarketWatch reported that the imbalance of supply and demand has forced homebuilders to cut prices of new homes below the average prices for existing homes by an impressive $33,500.
So, how should buyers and sellers navigate this rapidly shifting real estate market?
Buyers: Don’t Wait for the ‘Perfect’ Market
Never try to time the market.
“Don’t sit on the sidelines too long waiting for the ‘perfect’ drop — timing the market is nearly impossible,” said Danielle Andrews, realtor at Realty ONE Group. “Instead, get pre-approved now, choose your Realtor, and be ready to move quickly when the right home at the right value appears.”
That said, don’t rush into buying if you’re not ready. While much of the country has entered a buyer’s market, it could get even more buyer-friendly if interest rates drop, just as many competing buyers pause their home search during the holidays.
Buyers: Play Hardball
With far more sellers than buyers, now is a great time to feel out sellers to find the most motivated ones. Some desperate sellers may accept drastic price cuts to make a quick sale.
Real estate investor Charissa Bright of Bright Buys Houses urges buyers to lean into this market. “More homes on the market means stronger negotiating power, with some sellers offering incentives like rate buydowns, closing-cost help, and price flexibility. My advice is get pre-approved, know your budget, and be ready to pounce when the right house pops up.”
Buyers: Keep an Eye on Mortgage Rates
You and every other buyer want mortgage rates to fall. But if and when they do, it could drive up home prices again.
After all, most buyers finance their homes, so they make offers based on their projected monthly payment. Lower interest rates mean buyers can afford to spend more — so they offer more.
Sellers: Adjust Expectations
Your home may have been worth more six months ago than it is worth today. If you plan to sell, you need to accept and adapt to the new market conditions.
“Overpricing in a softening market leads to longer days on market and price cuts,” said Yancy Forsythe of Missouri Valley Homes. “It’s better to list slightly under current market value and attract serious buyers than to chase the market down.”
Sellers: Hold Unless You Have a Great Reason To Sell
If you must sell for financial or practical reasons, then you don’t have much choice. Alternatively, you might see a buying opportunity that’s so amazing that you just can’t pass on it.
But barring a compelling reason to move, sit tight in your current home. “Don’t panic,” said Andrews. “Real estate is a long game, so keep maintaining your property and remember that values rebound over time.”
Sellers: Make Strategic Upgrades (at Any Price Point)
You don’t need to spend a fortune on home improvements to sell your house.
You do need to think critically about marketing. Speak with a real estate agent about curb appeal improvements, even if they’re as simple as trimming trees or bushes, mulching flower beds, or spending a weekend repainting.
Sabine Ghali, managing director at Buttonwood Property Management, just worked with a client to sell in a cool market. “Instead of caving and just cutting the price, we got smart and focused on a few small upgrades we knew would pay off. We swapped out some outdated light fixtures and staged the extra bedroom as a home office. That little bit of work made a huge difference, and the house sold close to asking while similar listings took longer,” said Ghali.
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