There is no doubt that we have seen a considerable slowdown in the housing market over the past 18 months and most predict that this will continue throughout the year. For many markets, this slowdown merely means a more gradual increase in or even a stabilization of home values. However, some of the hottest housing markets throughout the pandemic are now predicted to see the greatest price corrections. The investment bank, Goldman Sachs, recently predicted that four cities across the country could likely see a housing crash.
A looming housing crash?
In a note to its clients, Goldman Sachs recently warned about 4 “overheated” housing markets that they expect to see plummeting home values over this year. Although they did not express concerns about a nationwide housing collapse, they did specify a likely price correction for the following 4 cities:
- San Jose, CA
- Austin, TX
- Phoenix, AZ
- San Diego, CA
As for further predictions, Goldman Sachs believes that mortgage interest rates will remain high for a longer period than expected. In fact, it has raised its forecast for the 30-year fixed mortgage rate to 6.5% by the end of 2023. As a reminder, September 2022 marked the first time since the 2008 housing crisis that the average long-term mortgage rate surpassed 6%. For perspective, the 30-year fixed mortgage rate was 3.56% at this time last year.
Summary
Although Goldman Sachs expects home prices to fall slightly by approximately 2% in markets such as New York and Chicago, it is expecting to see price growth in markets such as Miami and Baltimore. Although the larger economic climate will heavily influence housing prices for the remainder of the year, we continue to see strong demand throughout The Sunshine State relative to other parts of the country.
Are you thinking about moving to South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. Also, don’t forget to download our market leading Florida Home Search app for your mobile device.
