Oops! Home Prices Didn’t Crash After All

<article class="post-708727 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-708727"><span class="entry-date">June 5, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Oops! Home Prices Didn’t Crash After All</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Oops%21+Home+Prices+Didn%E2%80%99t+Crash+After+All&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Foops-home-prices-didnt-crash-after-all%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Oops! Home Prices Didn’t Crash After All Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20230605-oops-home-prices-didnt-crash-after-all.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>During the fourth<strong> </strong>quarter of last year, many housing experts predicted home prices were going to crash this year. Here are a few of those forecasts:</p>
<p><a href="https://www.yahoo.com/lifestyle/housing-recession-already-according-economists-150645245.html" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank">Jeremy Siegel</a>, Russell E. Palmer Professor Emeritus of Finance at the <em>Wharton School of Business</em>:</p>
<blockquote><p><em>“I expect housing prices fall 10% to 15%, and the housing prices are accelerating on the downside.”</em></p></blockquote>
<p><a href="https://twitter.com/markzandi/status/1577352297239248896?s=61&amp;t=a3XuSbg4t99IcSH3mFbdpQ" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank">Mark Zandi</a>, Chief Economist at <em>Moody’s Analytics</em>:</p>
<blockquote><p><em>“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.”</em> </p></blockquote>
<p><a href="https://www.goldmansachs.com/intelligence/pages/why-home-prices-are-poised-to-fall.html" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank">Goldman Sachs</a>: </p>
<blockquote><p><em>“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 </em><strong><em>home prices will decline by around 5% to 10% from the peak in the U.S.</em></strong><em> . . . Economists at Goldman Sachs Research say there are risks that housing markets could decline more than their model suggests.”</em></p></blockquote>
<h4><strong>The Bad News: It Rattled Consumer Confidence</strong></h4>
<p>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 <a href="https://www.fanniemae.com/media/46031/display" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank"><em>December Consumer Confidence Survey</em></a> from <em>Fannie Mae</em>. 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 (<em>see graph below</em>). That caused people to hesitate about their homebuying or selling plans as we entered the new year.</p>
<p><a href="https://files.keepingcurrentmatters.com/content/images/20230602/20230605-percent-of-americans-each-december-who-thought-prices-would-go-down-over-the-next-12-months.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230602/20230605-percent-of-americans-each-december-who-thought-prices-would-go-down-over-the-next-12-months.png"/></a></p>
<h4><strong>The Good News: Home Prices Never Crashed</strong></h4>
<p>However, home prices didn’t come crashing down and seem to be <a href="https://www.simplifyingthemarket.com/2023/05/16/the-worst-home-price-declines-are-behind-us/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank">already rebounding</a> from the minimal depreciation experienced over the last several months. </p>
<p>In a report just released, <em>Goldman Sachs</em> <a href="https://www.goldmansachs.com/intelligence/pages/as-interest-rates-climb-the-global-housing-market-is-surprisingly-stable.html" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank">explained</a>:</p>
<blockquote><p><em>“The global housing market seems to be stabilizing faster than expected despite months of rising mortgage rates, according to Goldman Sachs Research. </em><strong><em>House prices are defying expectations and are rising in major economies such as the U.S.</em></strong><em>,. . . ”</em></p></blockquote>
<p>Those claims from <em>Goldman Sachs </em>were verified by the release last week of two indexes on home prices: <a href="https://www.spglobal.com/spdji/en/indices/indicators/sp-corelogic-case-shiller-us-national-home-price-nsa-index/#news-research" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank"><em>Case-Shiller</em></a> and the <a href="https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index.aspx" rel="noopener noreferrer" style="color: rgb(5, 99, 193);" target="_blank">FHFA</a>. Here are the numbers each reported:</p>
<p><a href="https://files.keepingcurrentmatters.com/content/images/20230602/20230605-percent-change-in-home-values.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230602/20230605-percent-change-in-home-values.png"/></a></p>
<p>Home values seem to have turned the corner and are headed back up.</p>
<h3>Bottom Line</h3>
<p>The housing market is much stronger than many think. To get a true evaluation of your local market, reach out to a trusted real estate professional.</p>
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