By Briana Hoffman | REALTOR | Holmes4Sale
(This is part 2 of a series of posts I’m doing to share come concepts/data to help inform your decisions to buy/sell real estate in this market.)
2022 has had us on a wild ride- high highs and low lows. So where might the market be headed next? Well, no one has a crystal ball and knows for sure. But there are a lot of signs that economists look to that help us make an educated guess. This article from ksl.com is a good sum up of several recent reports on housing market predictions from economists at companies like Morgan Stanley, Goldman Sachs, Wells Fargo, Capital Econmics, etc.
There’s a growing consensus that year over year home price growth
will tip negative in the coming year. Although some companies are still forecasting home price appreciation to stay slightly positive.
Here’s a couple quotes from the article I found interesting and a good perspective to keep in mind:
“Now, it is predicting year-over-year home price growth will tip negative in 2023 and finish out the year at -3%.
‘We had originally been forecasting a return to growth in 2023, but the change to the forecast that's getting the most attention is that we went from plus 3% year over year growth in December of 2023 to -3% year over year growth by the end of next year,’ Egan [Morgan Stanley's co-head of U.S. Securitized Products Research] said.
‘So if I buy a house today, it might be lower a year from now? That seems worrisome,’ said Jay Bacow, Egan's fellow co-head.
‘Yes,’ Egan replied, but added there are positives and negatives to that forecast. While that would put U.S. home prices down 7% from their current levels, ‘THE POSITIVE HEADLINE IS THAT EVEN WITH THAT DECREASE IN HOME PRICES FROM TODAY, THAT ONLY BRINGS US BACK TO JANUARY OF 2022. THAT’S 32% ABOVE WHERE THEY WERE IN MARCH OF 2020.’“ (emphasis added.)
“As mortgage rates have ticked up, Goldman Sachs researchers' G-10 home price model is now showing prices will decline by about 5% to 10% from its peak in the U.S, according to a post on the investment bank's website titled ‘Why Home Prices are Poised to Fall.’
BUT AGAIN, REMEMBER TO PUT THOSE PREDICTED DIPS INTO PERSPECTIVE.
‘WHILE THE DROP IN HOME PRICES MAY SEEM LARGE, THOSE DECLINES ARE EXPECTED TO ONLY PARTLY OFFSET THE JUMP IN HOUSING PRICES THAT HAPPENED AFTER FEBRUARY 2020,’ THE POST STATES, NOTING U.S. HOME PRICES SOARED 42% SINCE THEN."
“…However, even with that correction, they predict prices will remain above average levels seen in 2021.
‘Low supply and strong demand will limit the extent home prices depreciate,’ [Wells Fargo economists] wrote.”
(Photo credit: Scott G Winterton, Deseret News)