If you're in the market for a house, you might want to wait a while – the prices of homes in at least four U.S. markets are expected to drop dramatically.
According to a report issued by Goldman Sachs, a seismic crash like the 2008 housing collapse is expected to occur in Austin, Texas; Phoenix, Arizona; San Diego, California; and San Jose, California.
A memo from the financial firm, obtained by the New York Post, indicates price declines of about 25% in those cities, which have "overheated housing markets," sometime this year.
According to the report, Goldman credits these cities as having the lowest prices in the coming year because they got "too detached from fundamentals during the pandemic housing boom."
The report appears to fall in line with a recent story published by the Phoenix Business Journal, which claimed Phoenix has become a buyer's market. That reports cites the Knock Buyer-Seller Market Index 2023, which indicates Phoenix is the top buyer's market for 2023 for the third month in a row. That's followed by Colorado Springs, Colorado; the Las Vegas area; Dallas/Fort Worth area; and the Denver area rounding out the top five.
"The top five buyers' markets for 2023 are all west of the Mississippi and were popular relocation spots during the pandemic, which caused home prices to accelerate at a faster pace than the rest of the nation on average," Knock noted.
As far as the best seller's market, Knock has the top five as Fayetteville, North Carolina; Harrisburg-Carlisle, Pennsylvania; Syracuse, New York; Hartford-East Hartford-Middletown, Connecticut; and York-Hanover, Pennsylvania.
"Concentrated in the East Coast, the top sellers' markets are forecast to see the strongest growth in home sales and listing prices in 2023," Knock said.
Meantime, Goldman Sachs says many Northeastern, Southeastern and Midwestern markets could see little fluctuation. The firm expects home prices to barely fall in cities like New York (-0.3%) and Chicago (-1.8%) while predicting higher prices in Baltimore (+0.5%) and Miami (+0.8%), according to the Post.
"Assuming the economy remains on the path to a soft landing, avoiding a recession, and the 30-year fixed mortgage rate falls back to 6.15% by year-end 2024, home price growth will likely shift from depreciation to below-trend appreciation in 2024," the memo noted, per the report.
The Knock report indicates that the U.S. housing market will cool down after the spring, "moving firmly into buyers' market territory by summer and continuing to trend that way through the end of the year."
"Prices are forecast to peak in June 2023 at $386,000, consistent with a typical home selling season. By November 2023, the median price is forecast to reach $374,000," the report noted.