Will Home Prices Drop in 2022 US?
Drop,Experts are divided on the outlook for home prices in the US, but there are a few general indicators. Moody’s Analytics predicts a 10 percent decline, although areas like Orlando and Phoenix may see a 20% drop peak-to-trough. The decline is unlikely to be accompanied by a recession, but a slowdown in the economy could tip the country into a recession.
Goldman Sachs
According to a new report by Goldman Sachs, home prices will likely fall more than 8% in 2022. In addition, the number of new homes sold is expected to decline by almost one-third. Overall, the housing economy is expected to contract by a whopping 9.2% by 2023, Goldman Sachs said. However, the firm did not predict a complete collapse of home prices. It did say that prices will continue to decline, but at a slower pace than they did during the last housing market downturn.
The decline in home prices is expected to begin at the end of August 2022. However, the market may remain hot until that point, when homebuyers begin to pull back. In addition to the rising costs of housing, increased interest rates are also weighing on the housing market. That could force builders to slash prices aggressively.
Firsttuesday
The US housing market is at a pivotal point. Rising mortgage interest rates have eroded the purchasing power of many buyers. In July, San Jose home prices decreased by 4.5 percent, Phoenix home prices dropped by 2.8%, and Austin home prices fell by 2.7%. This is a warning to potential home buyers.
While the home prices in the US are expected to increase slightly by 2022, the decline will be much less than the 36% increase seen in 2017. Still, there are a few signs to watch out for. First of all, the rate of inflation will remain above 3% for the next five months, and this will keep home prices from falling too far.
Considering the low supply of homes and the high demand, it is unlikely that home prices will fall much in the next few years. However, there are some factors that will affect the prices of homes and determine if they will continue to rise or continue to drop. For example, the economic conditions of a specific area may affect home prices in that city.
CoreLogic
Recent data shows that home prices are already starting to fall. In May, existing home sales dropped 8.6%, compared to May 2016. This decline may be even greater in certain markets, according to CoreLogic. The Prescott and Lake Havasu City areas of Arizona, for example, were ranked as markets that are at very high risk for price declines in the coming year.
While prices aren’t likely to fall to pre-pandemic levels, they are expected to drop significantly from current levels. This could create more buying opportunities for homebuyers. Additionally, mortgage rates are at record highs and are expected to continue rising. A small difference in rates can shave hundreds of dollars off a monthly payment.
The HPI Forecast is based on a two-stage error-correction econometric model developed by CoreLogic’s data scientists. This model combines equilibrium home price data with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks. The model forecasts home prices over a 30-year horizon, and projects single-family combined, excluding distressed sales.
