Goldman Sachs expects housing prices to worsen through 2023 as interest rates rise and housing prices fall.
The company wrote to clients earlier this month to predict that four US cities will face the worst disaster, comparable to the 2008 housing crisis.
San Jose, California; San Diego, California; Austin, Texas; and Phoenix, Arizona, have seen a significant increase before decreasing by more than 25%.
This decline will be similar to what was witnessed during the Great Depression in 2008. Home prices across the US fell by about 27% during that time, according to the S & P CoreLogic Case-Shiller index.
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“Revised projections to 2023 reflect our view that interest rates will remain higher than current rates, with 10-year Treasury yields rising sharply in 2023 Q3,” Goldman Sachs analysts wrote, according to the New York Post. “As a result, we are raising our 30-year fixed interest rate target to 6.5% by the end of 2023 (representing a 30 bp increase from our previous forecast).
In 2022, interest rates increased from 3% to 6%.
“This [national] Goldman Sachs wrote that the deficit should be very small to avoid mortgage stress, and a large increase in the number of demonstrations across the country seems unlikely,” said Goldman Sachs. 25%, indicating a high risk of home invasions starting in 2022 or late 2021.”
The bank said that these cities will have the lowest rates this year because they were severely isolated from the needs during the COVID-19 pandemic.
Goldman Sachs also predicts that many markets in the Northeast, Southeast, and Midwestern may see less improvement.
Home prices are expected to decline slightly in New York City (-0.3%) and Chicago (-1.8%), while Baltimore (+0.5%) and Miami (+0.8%) will see higher prices, the company said.
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“Assuming that the economy is still on a path to slow recovery, avoiding a recession, and that the 30-year fixed rate returns to 6.15% by the end of 2024, home price growth could shift from deflation to moderate decline. 2024,” Goldman Sachs he wrote.
The 30-year fixed rate was at 7.37% at its peak in November.