Yes, house prices are about to be corrected. But it's very unlikely that they will crash. While single-digit price declines across the country seem inevitable, declines of more than 20 percent, like the ones we experienced in the housing crash more than a decade ago, seem unlikely. A key difference is the current housing shortage.
The percentage of homes for sale that are empty is as low as ever, and the vacancy rate for rental homes is close to its lowest level. Home builders have struggled to keep up with the homes that were formed since the financial crisis, most recently due to disruptions in supply chains for building materials and appliances. A decade ago, homes were heavily overbuilt and the housing vacancy rate was at a record high. The current housing shortage places a flat figure below house prices.
In February, Zelman founder & Associates called the “peak” of the pandemic real estate boom. He made money again. Just a few weeks later, the rise in mortgage rates pushed the U.S. UU.
This summer, as the housing correction intensified, Zelman gave a bearish assessment of the U.S. Home Prices for Clients of Your Boutique Housing Research Firm. But Zelman isn't the only real estate bear either. From peak to low, Moody's Analytics expects the U.S.
Home Prices Will Decrease From 0% to 5% Nationwide. If a recession occurs, Moody's forecast goes from 5% to 10%, respectively. The fall in home prices is also predicted by research firms such as John Burns Real Estate Consulting, Zonda, Capital Economics and Pantheon. Fitch Ratings believes home prices could fall by 10% to 15% if the housing decline worsens.
Mark Zandi, chief economist at Moody's, explains to Fortune that factors such as the “unprecedented low vacancy rate”, very good underwriting and “simple” loans won't be enough to prevent a single-digit drop in home prices. However, it will prevent the United States,. The real estate market is not falling into a full-fledged “housing crash”. This time, Zandi says, homeowners are in a much better financial situation.
Keep in mind that when an economist or analyst says “U, S. House prices do not refer to your house. Across the country, Zandi says, the results of the ongoing housing correction will vary. In sparkling markets, such as Austin and Boise, Zandi predicts that home prices will fall between 5% and 10%.
If a recession occurs, Zandi expects falls of 15 to 20% in the country's 187 significantly “overvalued” regional real estate markets. The real estate market had an incredible year last year, with unprecedented interest rates, the highest annual growth in single-family securities and rents, a generational low in foreclosure rates, and the highest number of home sales in 15 years. The mix of homes being sold may be smaller on average as the market reacts to rising mortgage rates and declining affordability. The pandemic and the rapid adoption of remote work, which also contributed to rising house prices, will now contribute to the fall in house prices.
Goldman Sachs projects further declines next year in new home sales (another 8% drop), existing home sales (another 14% drop) and real estate GDP (another 9.2% drop). Current trends and forecasts for the next 12 to 24 months clearly show that the housing market is most likely to experience positive home price appreciation. The firm projects sharp declines this year in sales of new homes (down 22%), sales of existing homes (down 17%) and real estate GDP (down 8.9%). The housing market has been on its feet for much of the trip and continues to benefit greatly from the overall health of the economy.
As a result of rising mortgage rates, home values in about two-thirds of the country's main real estate markets declined last summer. The latest trends in the real estate market show that prices are rising in most parts of the country and in most price segments due to a lack of supply. The pressure on home price growth will continue until the end of the year, and house prices will continue to rise due to a mismatch between supply and demand. But housing investors are opportunistic and now see an opportunity with rising mortgage rates, the collapse of affordability, and what they rightly estimate will soon be falling house prices.
In many real estate markets, there is extreme demand for properties right now, and there simply aren't enough homes to sell to potential buyers. And while the heated market is cooling down a bit, it's unlikely that it will soon experience an equally steep decline. More than a decade of chronic underconstruction, together with millions of millennials entering the homebuying phase, have caused a significant mismatch in the supply and demand for housing in the United States. Buyers, sellers and real estate professionals across the country are trying to adapt to a real estate market that is very different from that of a few months ago.
Rick Sharga, executive vice president of market intelligence at ATTOM Data Solutions, expects declines of 5 percent. . .
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