In recent years the housing market has experienced unpredictable changes, leaving both buyers and homeowners unsure of what to expect. Goldman Sachs’ latest forecast is no different, as it predicts a significant drop in home prices across the nation.
Goldman Sachs analysts predicted in a note sent to clients that home prices in Austin would plummet by 19% by 2024. In Phoenix, they predict a drop of 16%, while in San Francisco and Seattle, the price will fall by 15%. This sharp drop in home prices can be attributed to the oversupply of homes in these metropolises, which has outstripped demand.
While overall housing inventories remain tighter than before the pandemic, in some vulnerable metro areas supply has increased rapidly. Our home price forecasts are most negative in geographies that have seen supply start to exceed demand,” wrote the authors, Lotfi Karaoui, Vinay Viwanathan, & Ronnie Walker.
This report has caused concern amongst homeowners in these regions, who are worried about the future of their investments. Goldman Sachs analysts emphasize that this anticipated drop in housing prices is not indicative of a larger trend in the housing markets.
Analysts note in particular that San Francisco, Austin, and other major cities are home to large tech companies, such as Amazon, Apple and Google. These firms have been leading the industry’s mass layoffs. Housing oversupply in these areas can be attributed to local factors, such as low affordability, pandemic-related distortions and a concentration of technology employment.
Goldman Sachs’ report is not the only one to forecast a housing market decline. The bank had previously predicted that the home price nationwide would fall by around 6% before hitting a bottom in the next 6 months due to higher mortgage rates.
In a January note, the strategists led by Goldman Chief Economist Jan Hatzius said that the sharpest declines in the U.S. Housing Market are behind us.
The Federal Reserve’s aggressive policy of tightening and slowing the economy had a major impact on the housing market. The benchmark federal funds rate has already been raised eight times in a row, and policymakers have indicated their intention to raise rates even higher this year to try to combat the high inflation.
Mortgage rates fell from their November peak of 7.08%, but recently reversed this trend and began to march up amid fears about interest rate hikes. According to data provided by mortgage lender Freddie Mac, the average rate of a 30-year-fixed mortgage rose to 6.65% in this week.
This is still significantly higher than a year ago, when rates were hovering around 3.76%. The rise in mortgage interest rates has led to a decline in the housing industry, because it makes home ownership less affordable for most Americans.
Other economists predicted even more severe declines in housing prices despite the Goldman Sachs report. Ian Shepherdson is the chief economist of Pantheon Macroeconomics. He warned that home values could fall by as much as 20 percent from their peak.
The housing market is clearly in flux. Many factors are contributing to this uncertainty. There are some positive signs that could help stabilize the housing market over the next few years.
The Biden administration, for example, has suggested a $15,000 credit for first time homebuyers. This could help many Americans afford a house. This proposal is a part of a larger plan to address the affordable housing crisis that has been a major problem in the United States in recent years.
The administration also announced plans to invest 318 billion dollars in affordable housing within the next 10 years. This investment will create affordable housing units and rehabilitate current units. It will also provide rental assistance for families who are in need.
These initiatives may help boost the demand for housing in certain metropolitan areas where there is currently an oversupply. It’s important to remember that it will take some time for these policies to have an impact on the housing market. The market will likely remain volatile in the short-term, with unpredictability in the supply and demand.
The ongoing COVID-19 epidemic could also have an impact on the housing market over the next few years. Millions of Americans have lost their jobs as a result of the pandemic and are struggling to survive. As a result, many homeowners were forced to sell or face foreclosure.
The roll-out of vaccines in many areas of the country and the relaxation of restrictions could however help boost the economy and stabilize housing markets. We could see a rise in housing demand in many areas of the country if the pandemic can be brought under control.
The housing market is an ecosystem that is constantly changing and complex. It is affected by many factors. Goldman Sachs’ latest forecast may worry homeowners in certain metropolitan areas. However, this is only one of many predictions.
It’s impossible to predict the future of the housing market because other economists have made different predictions. By staying up-to-date on the latest market trends, buyers and homeowners can make an informed decision about their investment and protect themselves from potential risks.
The housing market in the United States has been in flux with unpredictability in both supply and demand. Goldman Sachs’ latest forecast predicts that home prices will fall significantly in some of America’s largest cities due to an excess of housing.
This is only one of many predictions, so it’s crucial to take into account a variety of factors in assessing the current state of the housing markets. The proposed tax credit for homebuyers, and investment in affordable housing may help boost demand in certain areas. However, the ongoing COVID-19 epidemic could continue to have unpredictable effects on the market.
Homeowners and buyers who stay informed on the latest market trends can make better decisions and protect themselves from potential risks.