Goldman Sachs changed their 2023 housing market forecast in a more positive direction.
As noted in my post, “What Will Happen in the 2023 Real Estate Market?” Goldman Sachs was forecasting an average of 7.6% price decline from 2022.
Goldman Sachs already adjusted their outlook on January 10th, reducing that price decline to an average of 6.1%.
Just two weeks later, on January 23, Goldman Sachs adjusted their forecast in a big way, reducing their forecast of a price decline in 2023 to a mere 2.6%.
They do expect there to be a larger decline into the summer, but then expect prices to start rising and end the year with a 2.6% decline.
They expect the Mid-Atlantic region, which includes Maryland, to have only a modest decline. Other areas, like the Pacific Northwest and Southwest, they expect to see larger drops in home value. They believe the Baltimore real estate market will actually see a slight increase in home values – up 0.5% from 2022.
Why did Goldman Sachs adjust their forecast?
First, they have seen an influx of buyers at the beginning of the year.
They also point to the quick rise in home equity of current homeowners over the last few years, so even if there were a decline, most homeowners would not be under water. They also believe that with 90% of current mortgages with fixed rates, there wouldn’t be an issue with a rise in interest rates as there would be if many mortgagees had adjustable rate mortgages. The third thing they took into consideration was that many people have savings from during the pandemic, when many people weren’t spending as much as they may have prior to 2020. These three items all lead to a possible lower rate of foreclosures where homeowners owed much more than their homes were worth, and could bring in an influx of distressed homes to the real estate market.
Please keep in mind that this is just a forecast from one source. It is also just a forecast.
Real estate is also very, very local. Your Towson neighborhood may be different than a Timonium neighborhood just up the street. Call me to help you navigate this changing Timonium real estate market!
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