Source: New York Post —
Pain across the US housing market that began last year is likely just getting started if interest rates remain high, star economist Ken Rogoff warned on Tuesday.
Rogoff, a professor at Harvard University and former top economist at the International Monetary Fund, said home prices in both the US market aboard will fall “certainly another 10%” over the “couple of years.”
The economist cited the restrictive policy stances taken by the Federal Reserve and other central banks, which have caused a spike in mortgage rates and cooled demand among buyers.
“If, as I think, interest rates are going to stay high for some time to come, I think there’s still a lot of downward adjustments in the housing markets globally, not just in the United States,” Rogoff told Bloomberg Television during an appearance at the World Economic Forum in Davos, Switzerland.
The U S is NOT a single market. The shortage of available homes in desirable areas will keep values in those areas stable. Especially if there’s enough people with stable employment.
San Francisco is your example here shortage of available homes however prices have been hammered 37 percent.
San Francisco Bay Area House Prices Plunge 30% from Crazy Peak: Housing Bust 2
by Wolf Richter • Jan 19, 2023 • 195 Comments
Hammered by waves of layoffs, swooning stocks, collapsing cryptos, and 6% mortgage rates.
By Wolf Richter for WOLF STREET.
Home prices for all of California are down, Southern California too is getting hit, even San Diego, but the Bay Area is the standout in terms of the steep and deep plunge in prices.
Sales of single-family houses plunged by 37% year-over-year in the Bay Area. But in Southern California, where price declines haven’t been that huge yet, sales collapsed by 48%. In all of California, sales plunged 44%, to 240,000 homes, just a hair higher than during the bottom of Housing Bust 1 in late 2007.
The median price of single-family houses in the San Francisco Bay area plunged by 30% in December from the crazy peak in March 2022, by nearly $455,000, from $1.54 million to $1.08 million in nine months, according to the California Association of Realtors today. The plunge in December – after months of layoff announcements by big and small companies in the area – was particularly brutal.
I agree Pat. Leave it to an economist to make a sweeping statement that supposedly encompasses every single real estate market in the US. Simply put, it doesn’t work that way. All markets are cyclical but every market has a different cycle and different extraordinary elements that influences it, such as high taxes in California, that must be factored in. Some markets experience peaks and troughs and many have a “slow roll” so are thus more stable in the long run. In the case of a peak and trough market like San Francisco or course you will see a strong correction. In the case of a slow roll market like St. Louis, not so much.
I agree Pat we are in upstate NY and even with the rates as high as they are we still have a huge shortage of inventory and prices are still sky rocketing with multiple offers.
Leave it to an economist to make a sweeping statement that supposedly encompasses every single real estate market in the US. Simply put, it doesn’t work that way. All markets are cyclical but every market has a different cycle and different extraordinary elements that influences it, such as high taxes in California, that must be factored in. Some markets experience peaks and troughs and many have a “slow roll” so are thus more stable in the long run. In the case of a peak and trough market like San Francisco or course you will see a strong correction. In the case of a slow roll market like St. Louis, not so much.
Ill quote Dave Stone, An economist is a guy that knows 32 different ways to make love,
They just dont know any women.