"Home Price Correction: How to Navigate the Housing Market in 2023"

The article is discussing a report from Goldman Sachs that predicts a continued national home price correction through 2023. According to the report, the national home price correction will reach a peak-to-trough decline of roughly 10% by the end of the year. The report also states that some regional markets will be hit harder than others, with overheated markets in the Southwest and Pacific coast, such as Austin, San Diego, Phoenix, and San Jose, experiencing peak-to-trough declines of over 25%. These markets are also expected to have double-digit home price declines in 2023. On the other hand, Northeastern, Southeastern, and Midwestern markets are expected to see milder corrections or even home price increases in 2023, with Miami and Baltimore seeing the strongest growth. The report attributes the expected home price correction to the Fed's ongoing inflation fight, which caused mortgage rates to spike from 3% to 6% in 2022.

t's important to note that the housing market is always subject to change and can be affected by a variety of factors. It's also important to consider the specific location and housing market you are interested in, as the overall national trends may not necessarily apply to a specific region. It may be helpful to consult with a real estate professional and conduct your own research to get a better understanding of the current market conditions and potential future trends in the area you are looking to buy or rent in. Additionally, it may be wise to consider factors such as your own financial situation and long-term plans before making any major housing decisions

Goldman Sachs researchers also noted that the home price correction in certain regions will also be influenced by the state of the local economy. Markets that are more reliant on industries that were hit hard by the pandemic, such as tourism and hospitality, will likely see more severe corrections than markets that have more diversified economies.

Additionally, the researchers pointed out that the home price correction will also be impacted by the supply and demand dynamics in each market. Markets that have seen a high influx of new construction in recent years will likely see more moderate corrections, as the increased supply will help to mitigate the impact of rising mortgage rates. On the other hand, markets that have seen limited new construction will likely see more severe corrections, as the lack of supply will exacerbate the impact of rising mortgage rates.

The Goldman Sachs report also noted that the ongoing home price correction could have a knock-on effect on other areas of the economy, such as consumer spending and the labor market. As home prices continue to fall, consumers may become more cautious in their spending, which could lead to a slowdown in economic growth. The report also warned that the home price correction could lead to an increase in foreclosures, which could have a negative impact on the labor market.

Overall, while the home price correction is not expected to be as severe as the housing crash of 2007-2012, it will likely have a significant impact on certain regions and markets. Homeowners and potential buyers in "overheated" markets like Austin and San Diego will need to be prepared for more severe corrections, while those in less affected markets like Baltimore and Miami may not feel the impact as greatly.

1.16.23