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Yahoo published an article based on the Goldman Sachs paper, “Getting worse before getting better.”
Miami named 1 of 2 U.S. markets appreciating in 2023
Here are the takeaways:
- The Fed’s inflation fight has caused the second biggest home price correction of the post-WWII era, resulting in a 2.4% drop in U.S. home prices between June and October 2022.
- The ongoing home price correction may continue through 2023.
- Goldman Sachs forecasts a national home price correction of 10% from June 2022 to the end of 2023.
- Some regional markets will experience a decline of over 25%.
- A 10% peak-to-through decline in U.S. home prices shouldn’t do too much financial damage nationally.
- Overheated housing markets in the Southwest and Pacific coast may grapple with higher delinquencies for mortgages originated in 2022 or late 2021.
- Expect significant markets like Austin (-15.6), San Francisco (-13.7%), San Diego (-13.4%), Phoenix (-12.9%), Denver (-11.4%), Seattle (-11.2%), Tampa (-11.2%) and Las Vegas (-11.1%) to experience double-digit home price declines in 2023
- Expect home prices to rise in Baltimore (+0.5%) and Miami (+0.8%) in 2023.
- Expect the most significant blow to overheated markets like San Diego and Austin, which became too detached from fundamentals during the Pandemic Housing Boom.
- Goldman Sachs’ forecast, northeastern, Southeastern, and Midwestern markets could see milder or no corrections.
- Expect interest rates to remain elevated longer than currently priced in, with 10-year Treasury yields peaking in 2023 Q3 and the 30-year fixed mortgage rate rising to 6.5% by year-end 2023.
- Expect U.S. home prices to fall 6.1% in 2023 but not a prolonged downturn like the previous bust.
- The forecast for 2024 is a 1% rise in home prices.
- Mortgage rates remain the biggest wildcard for any home price forecast model; firms like Goldman Sachs may have to upgrade their home price outlooks if they continue to fall.
