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In recent years, California has enjoyed extraordinary price growth. The next dip, if it comes, will be relatively short-lived and viewed as a second chance for buyers. In July, San Jose home prices dropped 4.5%, Phoenix home prices fell 2.8%, and Austin home prices fell 2.7%.
Zandi
The US housing market is in the midst of a major shift, as home prices have reached their peak after two years of steady appreciation. The question on the minds of homebuyers is, when will housing prices go down? The short answer is: soon. However, it will not be as dramatic as during the housing bust, when prices fell by 27% from the peak in 2006 to the trough in 2012.
As the mortgage rate starts to rise, home sales are expected to fall. This would cause home prices to decline, and would cause a correction. In the past, this has happened several times. This summer, home sales all across the country dropped.
Zillow
Home prices are still high, but they may soon start declining. With mortgage rates rising, some homebuyers may start shifting toward smaller homes. The US housing market has reached its peak, and many are wondering: When will housing prices go down? According to experts, the home price will probably decline in the next few years, but not nearly as much as during the housing bust. Last month, more than one-fifth of homes nationwide had their prices drop.
The average US home price stands at $357,107, down 0.1% from last month. The Zillow Home Value Index tracks changes in home value on a monthly basis. The Index has been more volatile than previous months, but it’s starting to stabilize. After hitting an all-time high in April, the Index has slowed to 0.8% growth in May and 0.8% growth in June.
Fitch Ratings
Fitch Ratings recently issued a warning about overvalued housing in the United States. The company says that San Francisco and the Seattle metro area are the most overvalued markets. Overall, 46% of metro areas are more than 10% overvalued. If this trend continues, the company says home prices will rise by one to three percent in 2017.
The company also says that the US is in a much better position than it was in 2008, because households’ finances are healthier, the banking system is stronger, and the housing market shows little sign of overbuilding. The Great Recession hit in late 2007 and nearly brought the entire financial system to an end. However, it is now expected that the next recession will hit the country in early 2020. Unemployment is expected to spike again during this period.
Fannie Mae
While the economy is still doing very well, some economists believe that housing prices may be about to hit a tipping point. Fannie Mae’s Economic and Strategic Research Group has recently revised its forecast, saying that the housing market will experience a decline next year. While the company previously expected home prices to grow 16% a year, the new forecast calls for 4.4% growth.
The Economic and Strategic Research Group of Fannie Mae produces reports and forecasts that reflect the latest economic data. They also conduct surveys of mortgage lenders and consumer groups to determine the future direction of the housing market. The results of these studies are subject to change, and you should not rely on them for investment purposes.
Zillow’s earlier forecast
The housing market is currently in a slowdown and Zillow has recently revised its forecasts downward. In its earlier forecast for the first half of the year, Zillow predicted that home values would increase by 2.4%. That forecast was revised down to 2.3% in the second half, but the company has now stopped lowering its forecasts. In its latest report, Zillow now predicts that home values will increase by 1.4% this year.
The recent report from the Federal Reserve has reinforced the recent trend of rising interest rates. In July, the Fed announced a new round of big interest rate increases to fight inflation. This will impact homebuyers, as rising mortgage rates will increase the cost of borrowing and make buying a house more expensive.
Fannie Mae’s revised forecast
Fannie Mae’s latest economic forecast has confirmed that the housing market is nearing a tipping point. In its latest report, the company’s Economic and Strategic Research Group reduced its forecast for home prices through 2023, saying that home prices could even decline next year. While the company previously expected home prices to grow at 16% annually, its latest projection shows a decline of about four percent.
The housing market has suffered from rising mortgage rates, which are causing prices to fall. Fannie Mae’s most recent report shows that annual price growth is forecast to fall by 0.7 percent in the fourth quarter of this year. It also sees a slowdown starting in 2022.
