Fitch Ratings predicts US home prices at risk of 10% to 15% decline

The The pandemic housing boom gave way to Housing pandemic declines.

transnational, Mortgage interest rates spike is turning into fewer homebuyers. On an annual basis, Existing home sales and Mortgage buying app 15% and 18% decrease respectively. While single-family homes starting in July 19% lower than the level achieved a year ago.

The Federal Reserve has clarified this housing drop is by design. To contain soaring inflation, the central bank had to stem the booming housing market. That said, industry insiders aren’t sure exactly what the decline will mean for home prices. Some companies think house prices will continue to rise at a rapid rate of decline. Others predict house prices will fall soon.

On Tuesday, Fitch Ratings has finally released its outlook. The Big Three credit rating agencies are clearly on the downside.

“The likelihood of a severe recession for US housing has increased; however, our rating case scenario provides a more moderate decline consisting of a single-digit average decline in housing activity in 2023 and additional pressures into 2024.” wrote Fitch Ratings researchers on Tuesday. “While we recently confirmed the rating and Stable Outlook for our US home construction portfolio, the rating could face pressure under a pronounced recession scenario. More could include a decline in housing activity of about 30% or more, over a multi-year period, and a 10% decrease in Home prices by 15%. ”

In fact, Fitch Ratings even considers a home price reduction of 10% to 15% a ability alarming. If home prices actually drop 10% to 15% nationally, that could translate to a 20% to 30% drop in some of the region’s housing markets.

While nationwide home price declines are rare, they do happen occasionally. It occurred in the early 1980s, then again in the early 1990s, and most notably in the years following the 2008 housing bust. as Fitch Ratings suggests, is very rare. Only the Great Recession and the Great Recession saw price drops of that magnitude. If home prices do indeed drop 15%, we will likely see the Housing Pandemic Boom known as the Pandemic Housing Bubble.

Not everyone agrees with Fitch Ratings. In the next year, Mortgage Bankers Association, Fannie Mae, Freddie Mac, CoreLogicand Zillow All are predicting a single-digit increase in house prices.

But Fitch Ratings isn’t the only housing bear. Current forecasts by John Burns Real Estate Consulting, Capital Economics, Zelman & Associates, and Zonda will see modest declines in home prices. Meanwhile, economist Robert Shiller, who predicted the 2008 housing crash, agree with Fitch Ratings that house prices can drop more than 10% in the cards.

“Houses are said to be structurally under-supplied, but we are at risk of finding more homes on the market than buyers in the near term due to cyclical factors. I think there is fully aware that in some markets, an increase in inventory can cause bad times — a time when demand has dropped significantly,” said Ali Wolf, chief economist at Zonda. Luck. “We don’t believe house prices are only going up… Our forecast is for a slight decline in housing prices.”

If a house price correction does happen, it is likely Foaming markets like Boise, Phoenix and Las Vegas will be hardest hit.

Want to stay updated downhill housing? Follow me on Twitter in @NewsLambert.

Register Fortune feature email list so you don’t miss our biggest features, exclusive interviews and surveys.

Source link


Goz News: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably.

Related Articles

Back to top button