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Mortgage rates rise, Goldman scholar warns: US housing prices will stabilize in 2023

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hot once. withreal estateThe market has cooled sharply, and mortgage interest rates have doubled since the beginning of the pricebegin to devalue; multinational investment companyGoldman SachsEconomists at Goldman Sachs warned that the US housing market could plunge into its first recession in more than a decade, with home price growth expected to halt completely in 2023, and investors should prepare for a recession.


According to a report by software data analytics firm Black Knight, home prices fell 0.77% in the June-July period, the biggest monthly drop since January 2011 and the first monthly drop in 32 months.

Ben Graboschke, president of data analytics at Black Knight, said, “While home price growth for the full year has remained above 14%, in a market characterized by volatility and rapid change, such metrics can be misleading and Can affect current trends. The immediate reality is that as of July, about 85% of major housing market prices have fallen from their peak, with a third down more than 1% and about one in 10 down 4% or more. Home equities, which had risen in the first two years of the pandemic, are falling.

Meanwhile, so-called “tapable home equity” may have peaked in May, with home prices falling 5% in June and July as total tappable assets declined; Given the weakness of the housing market since then, in the third quarter of this year. There will be a big drop.

Black Knight defines “disposable assets” as the amount that the owner has 20% of the asset and can borrow; The second quarter of this year hit an all-time high of $11.5 trillion for the tenth consecutive quarter; But the data shows that it may have topped in May.

“Some of America’s wealthiest housing markets have seen significant volatility, particularly in major West Coast cities,” Grabske said. San Jose, California lost 20% of its available assets from April to July, followed by Seattle (-18%), San Diego (-14%), San Francisco (-14%) and Los Angeles (-10%). .

Although compared to the subprime mortgage crisis of 2007 and the Great Recession that followed, which led to a major correction in the housing market, even if the current housing price has generally declined by 15%, negative equity interest rates still remain that way. level is far below. financial crisis, so the sentiment of most homeowners is still positive; But if home prices lost 5% of their current value, about 275,000 borrowers, more than 80% of whom bought homes at their peak in the first half of this year, would be in trouble.

Meanwhile, a Goldman Sachs Strategy Analytics report predicts a sharp slowdown in real estate activity in the coming months, with home price growth eventually slashing to zero in the third quarter of next year. Jan Hetzius, chief economist at Goldman Sachs, said, “We expect home price growth to stop completely, averaging 0%, by 2023. It is possible for home prices to fall across the country, and in some regions altogether. It’s possible, but it seems impossible. Fell fast.”

Overall, Goldman Sachs expects new home sales to drop 22% this year, second home sales to drop 17%, and housing GDP to decline 8.9%. Further decline is expected in 2023, with housing GDP expected to decline further by 9.2% next year.

“In terms of home sales and home construction, we’re seeing a housing slowdown,” said Lawrence Yoon, chief economist at the National Association of Realtors (NAR).



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