Home Prices Didn’t Crash After All
During the fourth quarter of last year, many housing experts predicted home prices would crash this year. Here are a few of those forecasts:
Jeremy Siegel, Russell E. Palmer Professor Emeritus of Finance at the Wharton School of Business:
"I expect housing prices to fall 10% to 15%, and the prices are accelerating on the downside."
Mark Zandi, Chief Economist at Moody's Analytics:
"Buckle in. Assuming rates remain near 6.5% and the economy skirts recession, national house prices will fall almost 10% peak-to-trough. Most of those declines will happen sooner rather than later. And house prices will fall 20% if there is a typical recession."
Goldman Sachs:
"Housing is already cooling in the U.S., according to July data last week. As interest rates climb steadily higher, Goldman Sachs Research's G-10 home price model suggests home prices will decline by around 5% to 10% from the peak in the U.S. . . . Economists at Goldman Sachs Research say there are risks that housing markets could decline more than their model suggests."
The Bad News: It Rattled Consumer Confidence
These forecasts put doubt in the minds of many consumers about the strength of the residential real estate market. Evidence of this is in the December Consumer Confidence Survey from Fannie Mae. It showed a larger percentage of Americans believed home prices would fall over the next 12 months than in any other December in the survey's history (see graph below). That caused people to hesitate about their homebuying or selling plans as we entered the new year.
The Good News: Home Prices Never Crashed
However, home prices didn't come crashing down and seem already rebounding from the minimal depreciation experienced over the last several months.
In a report just released, Goldman Sachs explained:
"The global housing market seems to be stabilizing faster than expected despite months of rising mortgage rates, according to Goldman Sachs Research. House prices defy expectations and rise in major economies such as the U.S. . ."
Those claims from Goldman Sachs were verified by the release last week of two indexes on home prices: Case-Shiller and the FHFA. Here are the numbers each reported: Home values have turned the corner and will head back up.
Bottom Line
The housing market is much stronger than many think. To evaluate your local market, contact, The Aaronson Group where we can share the expert insights you need to make the best possible move today. Contact us-Email info@previewochomes.com or Call 949-388-5194
