Goldman Sachs Predicts Housing Crash in these 4 Cities (including San Diego)

San Jose, California; San Diego, California; Austin, Texas; and Phoenix, Arizona, will likely see noticeable increases before drastic decreases of more than 25%.- YIKES-

These declines would be similar to those witnessed during the Great Recession in 2008. Home prices across the U.S. fell around 27% at the time, according to the S&P CoreLogic Case-Shiller index.

The bank says these cities will suffer the lowest prices this year because they became too detached from fundamentals during the COVID-19 pandemic housing boom.

High mortgage rates, combined with soaring home prices, are currently driving some buyers away and contributing to a cooling housing market.

Austin, ranked the hottest real estate market in the U.S. in 2021 by Zillow, has fallen to 30th for 2023. The company’s report called the market “ice cold” and stated that homes are now spending an average of 68 days on the market, more than any other major U.S. metro. The Austin Board of Realtors has pushed back against the report, saying that there is still “incredibly high demand.”

Prices are expected to fall less than 2% in cities like New York and Chicago, according to Goldman, and even grow in others, like Baltimore and Miami.

National Association of Realtors Chief Economist Lawrence Yun said in his 2023 forecast that he sees “hopeful signs” for the country as a whole and expects housing prices to be flat on average.. “Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. The exceptions, however are markets like the San Francisco Bay Area, where San Jose is located, which he predicts will see potential 10-15% drops in 2023.Keep in mind these areas were appreciated the most during the pandameic

“Mortgage rates are the lifeblood that drive home sales,” Yun said. The average rate on a 30-year loan was 6.15% this week, nearly a full point below the 7.08% high of September 2022.

So he does not agree, we will have to wait and see…

Areas in San Diego with the highest appreciation such as Carlsbad, Rancho Pensquitos, and Encintias have seen up to 8% decreases this year, but we really need to unpack that. According to the california association of realtors December housing numbers based on Zip code - which I’ll link in the description- the 8% decline is only on attached homes in carlsbad whereas single family homes increased in median value. Personally I think a lot of the housing market decrease is caused by home sellers still trying to price their homes like it was the pandemic and not based on the current interest rates. Those homes are declining in price as the sellers are either reducing their prices OR accepting a lower offer.

I know I talk about inventory, but as of December we are DOWN in homes for sale, and we do not have nearly enough homes to satisfy buyer demands. As home builders are slowing down in building new homes, this will continue to be a problem. But anything can happen…remember I’m not an economist I am a realtor in San Diego

Personally I still am getting about 10 texts and calls from investors trying to find homes to buy in San Diego and am working with many home buyers who are havinga hard time finding a home they love with this lower inventory. In addition I am seeing homes receive muliptle offers- because those homes are move in ready and highly desirable.

So what do you think…are we doomed in the next year…leave a comment and subscribe to my channel to stay on top of san diego.