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Oops... Home Prices Did Not Fall.

During the fourth quarter of last year, numerous housing experts painted a bleak picture for the real estate market, predicting a sharp decline in home prices this year. Here are a few examples of those forecasts:

Jeremy Siegel, Russell E. Palmer Professor Emeritus of Finance at the Wharton School of Business, stated, "I expect housing prices to fall by 10% to 15%, with prices accelerating on the downside."



Mark Zandi, Chief Economist at Moody's Analytics, warned, "Buckle in. Assuming rates remain near their current 6.5% and the economy skirts recession, then national house prices will fall almost 10% peak-to-trough. Most of those declines will happen sooner rather than later. And house prices will fall 20% if there is a typical recession."

Goldman Sachs cautioned, "Housing is already cooling in the U.S., according to July data that was reported last week. As interest rates climb steadily higher, Goldman Sachs Research's G-10 home price model suggests home prices will decline by around 5% to 10% from the peak in the U.S. . . . Economists at Goldman Sachs Research say there are risks that housing markets could decline more than their model suggests."

Unfortunately, these forecasts instilled doubt in the minds of many consumers regarding the strength of the residential real estate market. This sentiment was reflected in the December Consumer Confidence Survey from Fannie Mae, which revealed that a larger percentage of Americans believed home prices would fall over the next 12 months than in any other December in the history of the survey. Consequently, people hesitated in their homebuying or selling plans as we entered the new year.

However, the good news is that home prices did not crash as predicted and appear to be rebounding from the minimal depreciation experienced over the last several months. In a recently released report, Goldman Sachs explained, "The global housing market seems to be stabilizing faster than expected despite months of rising mortgage rates, according to Goldman Sachs Research. House prices are defying expectations and are rising in major economies such as the U.S."


These claims from Goldman Sachs were substantiated by the release of two indexes on home prices: Case-Shiller and the FHFA. Both indexes reported that home values seem to have turned the corner and are heading back up.

In light of these developments, it is crucial for us as real estate professionals to correct the narrative that was misleadingly propagated last fall. The forecasts of significant home price appreciation were broadcasted loudly through mass media outlets, industry newspapers, and podcasts. Now that the worst-case scenario did not come to pass and the market is showing signs of recovery, it is our responsibility—some may say our duty—to convey this information to the American consumer, albeit in a more subdued manner.

Here in Charleston we're seeing robust sales and in many cases multiple offers again. We're still challenged by lower than average inventory in most areas around town, making it an excellent time to sell.

For buyers, in part because of the perception that prices would drop, there are still fewer than normal numbers of buyers competing for the available homes.

Give us a call to discuss what this means for you and your buying and selling plans. We're happy to meet, discuss, analyze and help you strategically navigate the real estate market in Charleston. | 843-885-8519 or info@charlestonluxurygroup.com

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