Experts Say Home Prices Will Continue to Appreciate
It’s clear that consumers are concerned about how quickly home
values are rising. Many people fear the speed of appreciation may lead
to a crash in prices later this year. In fact, Google reports that the search for “When is the housing market going to crash?” has actually spiked 2450% over the past month.
In addition, Jim Dalrymple II of Inman News notes:
“One of the most noteworthy things that came up in
Inman’s conversations with agents was that every single one said they’ve
had conversations with clients about whether or not the market is
heading into a bubble.”
To alleviate some of these concerns, let’s look at what several
financial analysts are saying about the current residential real estate
market. Within the last thirty days, four of the major financial
services giants came to the same conclusion:
the housing market is strong, and price appreciation will continue. Here are their statements on the issue:
Goldman Sachs’ Research Note on Housing:
“Strong demand for housing looks sustainable. Even
before the pandemic, demographic tailwinds and historically-low mortgage
rates had pushed demand to high levels. … consumer surveys indicate
that household buying intentions are now the highest in 20 years. … As a
result, the model projects double-digit price gains both this year and
next.”
Joe Seydl, Senior Markets Economist, J.P.Morgan:
“Homebuyers—interest rates are still historically
low, though they are inching up. Housing prices have spiked during the
last six-to-nine months, but we don’t expect them to fall soon, and we
believe they are more likely to keep rising. If you are looking to
purchase a new home, conditions now may be better than 12 months hence.”
Morgan Stanley, Thoughts on the Market Podcast:
“Unlike 15 years ago, the euphoria in today’s home
prices comes down to the simple logic of supply and demand. And we at
Morgan Stanley conclude that this time the sector is on a sustainably,
sturdy foundation . . . . This robust demand and highly challenged
supply, along with tight mortgage lending standards, may continue to
bode well for home prices. Higher interest rates and post pandemic moves
could likely slow the pace of appreciation, but the upward trajectory
remains very much on course.”
Merrill Lynch’s Capital Market Outlook:
“There are reasons to believe that this is likely to
be an unusually long and strong housing expansion. Demand is very strong
because the biggest demographic cohort in history is moving through the
household-formation and peak home-buying stages of its life cycle.
Coronavirus-related preference changes have also sharply boosted home
buying demand. At the same time, supply is unusually tight, with
available homes for sale at record-low levels. Double-digit price gains
are rationing the supply.”
Bottom Line
If you’re concerned about making the decision to buy or sell right
now, let’s connect to discuss what’s happening in our local market.