Home prices have been a hot topic of discussion, with many experts predicting a crash in the housing market this year. Let's take a look at some of those forecasts and examine the current situation.
Jeremy Siegel, Russell E. Palmer Professor Emeritus of Finance at the Wharton School of Business, expressed his concerns, stating, "I expect housing prices to fall by 10% to 15%, and the downward trend in prices is gaining momentum." Similarly, Mark Zandi, Chief Economist at Moody's Analytics, warned that if the economy avoids a recession and interest rates remain around 6.5%, national house prices could decline by almost 10% from their peak, with even larger drops during a typical recession. Goldman Sachs also added to the gloomy outlook, suggesting a potential decline of 5% to 10% in home prices due to rising interest rates.
These forecasts had a negative impact on consumer confidence, as seen in the December Consumer Confidence Survey conducted by Fannie Mae. The survey revealed that a higher percentage of Americans believed home prices would fall in the coming year compared to previous Decembers. Consequently, potential homebuyers and sellers hesitated, unsure about the stability of the real estate market.
Contrary to these fears, home prices did not crash and have shown signs of rebounding from the slight depreciation experienced in recent months. In a recent report, Goldman Sachs stated that the global housing market, including the United States, appears to be stabilizing faster than expected, defying initial predictions of a downturn. This assessment was supported by the release of two home price indexes, Case-Shiller and the FHFA, which indicated a positive trend in home values.
The latest data suggests that home prices have turned the corner and are on an upward trajectory once again. It's good news for homeowners and those looking to enter the market.
In conclusion, 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. Anthony Spitaleri and his team recognize their responsibility, even duty, to correct the narrative in the minds of the American consumer.
