Chairman and CEO of Hovnanian Enterprises Ara Hovnanian discusses the state of homebuilders and whether the housing market has bottomed out on “The Claman Countdown.”
Goldman Sachs It expects home values to deteriorate through 2023 amid continued skyrocketing interest rates and declining home prices.
The company wrote to clients earlier this month that it expected four US cities to suffer some of the most catastrophic declines, drawing comparisons to the housing collapse of 2008.
San Jose, California; San Diego, California; Austin, Texas; And Phoenix, Arizona, is likely to see notable increases before a sharp decline of more than 25%.
These declines would be similar to those experienced in the Great Recession of 2008. Home prices across the United States have fallen about 27% in that time, according to the S&P CoreLogic Case-Shiller Index.
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Goldman Sachs expects home values to worsen through 2023 amid continued skyrocketing interest rates and declining home prices. (Reuters Photo)
“Our revised outlook for 2023 primarily reflects our view that interest rates will remain at elevated levels longer than the current rate, with 10-year Treasury yields peaking in the third quarter of 2023,” the strategists at Goldman Sachs wrote. post. “As a result, we are raising our forecast for the 30-year fixed rate mortgage rate to 6.5% for the end of 2023 (which is an increase of 30 basis points from our previous forecast).
in 2022, mortgage rates It jumped from 3% to 6%.
“This is amazing [national] Goldman Sachs wrote that the downturn would have to be small enough to avoid pressures from broad mortgage credit, with a sharp increase in foreclosures across the country looking unlikely. peak-to-trough levels of more than 25%, presenting a local risk of a spike in mortgage delinquencies arising in 2022 or late 2021.”
San Jose, California; San Diego, California; Austin, Texas; And Phoenix, Arizona (pictured), will likely see notable increases before sharp declines of more than 25%. (iStock/iStock)
The bank says that these cities will suffer from Cheapest prices This year because they got so disconnected from the essentials during the COVID-19 pandemic housing boom.
Goldman Sachs also expects that many Northeast, Southeast and Midwest markets may see more moderate corrections.
Home prices are expected to decline slightly in New York City (-0.3%) and Chicago (-1.8%), the company said, while Baltimore (+0.5%) and Miami (+0.8%) will see price increases.
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Home prices are expected to decline slightly in New York City and Chicago, while Baltimore and Miami (pictured) will see prices rise. (iStock/iStock)
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“Assuming the economy remains on a soft landing path, avoids a recession, and the 30-year fixed mortgage rate falls to 6.15% by the end of 2024, home price growth is likely to turn from low to high below trend in 2024,” Goldman wrote. sax.
The average 30-year fixed mortgage rate was 7.37% at its peak in November.