Oops! Home Prices in L.A. and Beverly Hills, CA Didn’t Crash After All
Oops! Home Prices in L.A. and Beverly Hills, CA Didn’t Crash After All | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert
During the fourth quarter of last year, numerous housing experts predicted a downturn in home prices for this year. Here are a few of those forecasts, along with their respective experts:
Jeremy Siegel, Russell E. Palmer Professor Emeritus of Finance at the Wharton School of Business, expressed his expectation of a 10% to 15% decline in housing prices, emphasizing that the downward trend was gaining momentum.
Mark Zandi, Chief Economist at Moody's Analytics, warned of a potential national house price drop of almost 10% if interest rates remained around 6.5% and the economy avoided recession. In the event of a typical recession, Zandi projected a 20% decline in house prices.
Goldman Sachs, noting the cooling of the housing market in the United States, suggested that home prices could decrease by 5% to 10% from their peak, particularly as interest rates continued to rise.
These predictions caused doubt among consumers regarding the stability of the residential real estate market. The December Consumer Confidence Survey from Fannie Mae reflected this sentiment, revealing a higher percentage of Americans anticipating home price declines over the next 12 months compared to any previous December.
However, contrary to these forecasts, home prices did not experience a crash and have even begun rebounding from the minimal depreciation observed over the last few months. In a recent report, Goldman Sachs highlighted that the global housing market, including the United States, appeared to be stabilizing faster than expected, with house prices defying expectations and rising in major economies.
This positive outlook was further supported by the release of two home price indexes, Case-Shiller and the FHFA, which both indicated a turnaround and upward trajectory in home values.
The bottom line is that the dire predictions made last fall regarding significant home price depreciation were overstated. Media outlets, industry publications, and podcasts amplified the news of an impending crash in prices. However, now forecasters are acknowledging that the worst is over and that the situation was nowhere near as severe as initially projected. This shift in sentiment is now being communicated more quietly.
As real estate professionals, it is our responsibility to correct this narrative in the minds of American consumers. The evidence shows that the housing market is proving to be resilient, with home values bouncing back and demonstrating an upward trend once again.