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» VISIT US ONLINE @ DSNEWS.COM 19 S kylar Olsen joined Zillow in the summer of 2012. Her research is used by consumers, policymakers, and other researchers to understand real estate markets and make better decisions. While authoring works such as A House Divided–How Race Colors the Path to Homeownership and numerous other Zillow research projects, she also creates many of Zillow's real estate indices and metrics, including the Buyer-Seller Index and the Buy-Rent Breakeven Horizon. Olsen also heads the economic research team at Zillow affiliate StreetEasy in New York. She holds a Ph.D. in Economics from the University of Washington, specializing in econometrics and environmental economics. Her academic work focused on using housing data to explore environmental issues. Prior to her work at Zillow, Olsen was honored for teaching excellence by the University of Washington. What trends have you seen in homebuying activity post-election? From our point of view, time will only tell. When we do look at the things that we can observe over a short period of time, we have seen that mortgage rates have jumped up pretty quickly since the night before the election. ey are actually up 40 basis points—almost to 4 percent—which is a big deal, because for the longest time they had remained exceptionally low, and we were all wondering when they were going to start going up. Turns out, they are starting to go up now as the international trust in our American market has waned because of uncertainty from our election results. What do these shifts predict for the future of the housing market? When we think about what the effect of higher mortgage rates may be, it is going to be a particular problem in those areas where mortgage affordability is already a little worse than it's been historically. ese are areas like San Francisco and San Jose where home values had increased so fast out of the trough that they are already above pre-recession peaks. High home values—combined with interest rates going up—are going to cause a scenario where mortgages are now more expensive than they historically have been. When we look at various metrics across the country, interest rates have to come up quite a bit until you get to that point, but for really expensive metros they are already at that point, so mortgages will start to feel even more expensive and will contribute again to home values slowing down. is is a bit reflected in the fact that our forecast over the next year also predicts home values to begin slowing down. We anticipate continued slowing of people reacting to the fact that now mortgages are more expensive. How do you feel potential homebuyers will react to the market fluctuations you are seeing? I think it really depends on where you are. Let's say I'm a potential homebuyer and I currently own my house. When there is uncertainty in the U.S. market— especially from international investors looking in at U.S. assets—as the interest rates go up for mortgages and it gets more expensive as uncertainty in the market increases, that is going to have an effect on current homeowners to the point that they might not want to leave their property. e flip side of that, though, is a potential homebuyer who doesn't currently own. If they don't currently own a home (usually millennials), it's typically because they have been forestalled for several reasons. e biggest reason is a delaying of major life events that lead to homeownership, but another big stall is the competitiveness of the market, because so many people are interested in a limited amount of inventory. With this new administration, if you ask me if these people are still going to be looking for homes, the answer is "yes." ey aren't locked into the lower interest rates, and so interest rates increasing won't have a big impact on them. If existing homeowners are starting to feel like the climate is not good for them to buy, that might spell good news for millennial buyers in that they might have less competition. Reflecting on the end of 2016, what housing trends do you think were the most notable? e big theme of 2016 that I think will continue but possibly ease up and start turning around in 2017 is low inventory. Inventory is so low and continues to go lower. We are starting to see construction pick up, albeit at a bit of an anemic pace. e hope is that as healthy markets begin to cool down over the next year as we expect them to do, buyers will begin to be more in the driver's seat. However, they won't see any real relief until 2019. It'll take a while for it to cool down and be less of a significantly strong sellers' market in most markets. What housing factors do you feel will be most in play in 2017? Watch out for affordability concerns to hit home in a lot of major metropolitan areas. I think we will start seeing policy proposals for how to deal with it. Markets overseas are targeting transportation to ease the affordability issue of having to move further and further away from your job. Others are targeting how we provide more affordable units that are for those making much lower incomes. Others still may turn to upzoning, especially around those transit areas to provide more housing for those that are moving towards jobs where supply is having a hard time responding. It's starting to reach critical mass for a lot of areas, but a lot of building has already been happening, too, and we expect more to continue into the future. at should start to slow down rents, and because incomes are starting to finally increase, we may actually see some relief from rental affordability.

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