Goldman Sachs: 4 US cities to suffer 2008 crash in home pric...| MENAFN.COM

Saturday, 28 January 2023 08:52 GMT

Goldman Sachs: 4 US cities to suffer 2008 crash in home prices


(MENAFN) Goldman Sachs anticipates home values to worsen through this year amid continued rising interest rates and decreasing housing costs.

The company wrote to clients earlier in January that it expects four U.S. cities will struggle the most disastrous dips, drawing contrasts to the 2008 housing crash.

San Jose, California; San Diego, California; Austin, Texas; and Phoenix, Arizona, might witness obvious rises before drastic reductions of over 25 percent.

These drops would be alike to those saw throughout the Great Recession in 2008. Home costs in the U.S. declined around 27 percent at the time, in line with the S&P CoreLogic Case-Shiller index.

"Our 2023 revised forecast primarily reflects our view that interest rates will remain at elevated levels longer than currently priced in, with 10-year Treasury yields peaking in 2023 Q3," Goldman Sachs strategists showed, in agreement with the New York Post. "As a result, we are raising our forecast for the 30-year fixed mortgage rate to 6.5 percent for year-end 2023 (representing a 30 bp increase from our prior expectation)."

Last year, mortgage rates rose from 3 percent to 6 percent.

"This [national] decline should be small enough as to avoid broad mortgage credit stress, with a sharp increase in foreclosures nationwide seeming unlikely," Goldman Sachs stated. "That said, overheated housing markets in the Southwest and Pacific coast, such as San Jose MSA, Austin MSA, Phoenix MSA, and San Diego MSA will likely grapple with peak-to-trough declines of over 25 percent, presenting localized risk of higher delinquencies for mortgages originated in 2022 or late 2021."

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