Oops! Home Prices Didn’t Crash After All

During the fourth quarter of last year, many housing experts predicted home prices were going to crash this year. Here are a few of those forecasts:

Jeremy Siegel, Russell E. Palmer Professor Emeritus of Finance at the Wharton School of Business:

“I expect housing prices fall 10% to 15%, and the housing prices are accelerating on the downside.”
Mark Zandi, Chief Economist at Moody’s Analytics:

"Buckle in. Assuming rates remain near their current 6.5% and the economy skirts recession, then national house prices will fall almost 10% peak-to-trough. Most of those declines will happen sooner rather than later. And house prices will fall 20% if there is a typical recession.” 
Goldman Sachs

“Housing is already cooling in the U.S., according to July data that was reported last week. As interest rates climb steadily higher, Goldman Sachs Research’s G-10 home price model suggests home prices will decline by around 5% to 10% from the peak in the U.S. . . . Economists at Goldman Sachs Research say there are risks that housing markets could decline more than their model suggests.”

The Bad News: It Rattled Consumer Confidence

These forecasts put doubt in the minds of many consumers about the strength of the residential real estate market. Evidence of this can be seen in the December Consumer Confidence Survey from Fannie Mae. It showed a larger percentage of Americans believed home prices would fall over the next 12 months than in any other December in the history of the survey (see graph below). That caused people to hesitate about their homebuying or selling plans as we entered the new year.
 

The Good News: Home Prices Never Crashed

However, home prices didn’t come crashing down and seem to be already rebounding from the minimal depreciation experienced over the last several months.

In a report just released, Goldman Sachs explained:

“The global housing market seems to be stabilizing faster than expected despite months of rising mortgage rates, according to Goldman Sachs Research. House prices are defying expectations and are rising in major economies such as the U.S.,. . . ”
Those claims from Goldman Sachs were verified by the release last week of two indexes on home prices: Case-Shiller and the FHFA. Here are the numbers each reported:


Home values seem to have turned the corner and are headed back up.

Bottom Line

When the forecasts of significant home price depreciation were made last fall, they were made with megaphones. Mass media outlets, industry newspapers, and podcasts all broadcasted the news of an eminent crash in prices.

Now, forecasters are saying the worst is over and it wasn’t anywhere near as bad as they originally projected. However, they are whispering the news instead of using megaphones. As real estate professionals, it is our responsibility – some may say duty – to correct this narrative in the minds of the American consumer.


Recent Blog Posts

Unwind and De-Stress: Practical Tips for Managing Everyday Stress

In today's fast-paced world, stress seems like an inevitable companion in our lives. From work pressures to personal commitments, it's easy to feel overwhelmed. But wh… Read more

Navigating Retirement: Financial Tips and Lifestyle Choices for Individuals Over 50

As you approach the golden years of your life, there's a mix of anticipation and concern about retirement. It's a phase that demands careful planning and smart decisio… Read more

Finding Your Family Haven: A Realtor's Guide to Kid-Friendly Homes

Welcome to the world of parenthood, where every decision is made with your family's well-being in mind. As a seasoned realtor specializing in family homes, I understan… Read more

An Expert Gives You Clarity in Today’s Housing Market

Buying a home is a big decision, and it should be one you feel confident making.

What Buyer Activity Tells Us About the Housing Market

Though the housing market is no longer experiencing the frenzy of a year ago, buyers are showing their interest in purchasing a home.

Here’s Why the Housing Market Isn’t Going To Crash [INFOGRAPHIC]

Today’s housing market is different than it was in 2008.

What’s Ahead for Home Prices in 2023

Over the past year, home prices have been a widely debated topic.

Moving Now Can Give Your House Its Day in the Sun [INFOGRAPHIC]

If you want to sell your house, consider doing it this summer.

The Role of Access in Selling Your House

Today, the market’s changing, and buyers can usually be more selective and take more time to explore their options.

Work with Nelida

Providing clients with ultimate bespoke representation, customized marketing strategy, and a culture built on service. Excelling in exceeding expectations for buyers and sellers.