For several months, the term “housing shortage” has been a topic of concern for real estate professionals and home buyers alike. For many large cities across the United States, a shortage of homes for sale continues to affect the real estate market. However, in a recent report from Goldman Sachs, it is anticipated that four major cities in the U.S. have more homes for sale than reported since early 2020.
This increase in inventory could lead to a housing slump and result in continued fall of home prices. Dani Romero reported in an article in Yahoo!Finance that Austin, Texas could see prices to fall 19%, followed by Phoenix, AZ who could see 16% decline and San Francisco and Seattle drops of 15% and 12% respectively. Several factors weigh into the projected decline in home prices. As stated in the article, “Regionally, the West Coast and Southwest have been hit with an oversupply ‘reflecting local challenges, particularly very poor levels of affordability, pandemic-related distortions, and in certain markets a high concentration of employment in the technology industry,’ Goldman noted.”
As many Americans know, the west coast home values are among some of the priciest in American real estate, so these homes have the potential to take significant dips in value. Coupled with layoffs across the tech industry, many of which are based on the west coast, and pandemic related relocations out of the area, this area of the United States has been and will continue to see dips in value.
As for the rest of the United States, the future doesn’t look quite so grim. The Goldman Sachs report projects a fall of just over 6% for 2023, even with the mortgage rates surpassing 6%. The impact of a tight new construction market and the continued decrease of housing starts which has fallen 4.5% from last February will play a role in how the real estate market is able to stabilize.
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