Housing Market May See Decline in Prices
According to Moody’s chief economist Mark Zandi and Redfin CEO Glenn Kelman, there may be a decrease in US home prices in the near future. Zandi believes that in order to revive the housing market, price drops might be necessary and could potentially take years to recover. He expressed this sentiment in an interview with Yahoo Finance, where he also mentioned that mortgage rates need to decrease, incomes should continue to improve, and a recession needs to be avoided in order to see sales increase.
Similarly, Redfin CEO Glenn Kelman echoed these concerns in a Fox News interview, suggesting that a price decline seems not only possible but likely, especially in light of Morgan Stanley’s latest forecast of a 3% drop in home prices next year.
The housing market has come to a standstill as a result of the Federal Reserve’s efforts to combat inflation by raising interest rates, resulting in the highest mortgage rates seen in two decades. Homeowners who secured lower rates are hesitant to sell due to the prospect of higher monthly payments for their next property and potential buyers are postponing their search in hopes of a rate decrease.
Zandi pointed out that there has been a significant decline in annualized sales of previously owned homes, with October seeing the lowest figures in 13 years. He doesn’t expect the housing market to bounce back until 2025 or 2026, while Kelman noted a recent increase in housing inventory, as well as more homeowners listing their properties at lower prices. As a result, he believes that the market may see a real drop in prices that could spark increased sales.
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