Housing 101: Timing, Timing, Timing

Fortune Mag citing Wells Fargo has most balanced forecast of housing downturn now heating up: Mortgage rates up & prices down thru 2023 as inflation headwinds move coast to coast, but modest rebound in 2024 …

We all know by now that so-called housing GDP soared … sometimes to ridiculous and unsustainable heights … by 12.8% in 2020; then, in 2021 it spiked another 9.9%. Fortune says Wells Fargo says “all of those activity gains could soon be erased.” The prominent financial institution, in fact, now projects sharp declines in new (-10.5%) & existing (-7.4%) home sales in 2022 and an even more intense downturn in 2023, i.e., by -6.5% and -13.1%, respectively. That’s primarily because the bank thinks the Fed will keep its once ridiculously low interest rate elevated and, therefore, the related institutional mortgage rates to “remain above 6% through Q4-2023.” As a result, “national home prices will sink 5.5% next year”, depending “significantly” by the market you’re in.

Naturally, the “markets where home prices shot the highest are now vulnerable to a disproportionate swing to the downside,” warns WF researchers. The good news: “Unlike the 6-yr housing downturn that started in 2006, WF predicts this ongoing housing downturn should fizzle out heating into 2024. In fact, WF predicts in 2024 that housing GDP will rise 5.1% while US home prices rebound by 3.1%.

Davd Soul