NEW YORK–With home prices at record highs following record appreciation in recent years, many borrowers and lenders alike are going to be surprised by a new report from Goldman Sachs that is predicting prices have yet to peak.
The investment bank is projecting that home prices will grow another 16% by the end of 2022.
“Despite price increases of 20% over the past year, the analysts at Goldman Sachs suggest that homes remain ‘relatively affordable’ thanks to historically low mortgage rates,” CNN Business reported. “But continued strong demand among buyers and ongoing low inventory will keep pushing prices even higher, according to the report.”
While the home inventory situation has improved, with more homes for sale and price growth moderating a bit, Goldman's analysts say the supply and demand imbalance is expected to continue through next year, according to the report.
“But it is questionable whether demand will remain as strong going forward, given the high prices. About two-thirds, 66%, of respondents to a University of Michigan survey on homebuyer sentiment said this is not a good time to buy a home, according to the report,” CNN Business reported. “That's the highest it has been since the early 1980's.”
‘Reluctant Bulls’
Goldman’s analysts described homeowners remain “reluctant bulls,” who still intend to buy despite thinking it's a bad time.
According to the Goldman Sachs, its model looked at supply, demand, affordability and home prices.
“It projects that strong demand and tight supply will gradually erode affordability and make homes so pricey that more people will drop out of the market,” CNN Business stated. “That reduced demand will ultimately allow for more inventory on the market and eventually the supply-demand imbalance will ease. But not before prices jump another 16% by the end of next year.”
In addition to home prices continuing to move higher, rents will continue to rise as well, the analysts said, and regulatory efforts from the White House, Congress or individual states or municipalities to alleviate the housing shortage may not be enough, CNN Business stated.
The investment bank is projecting that home prices will grow another 16% by the end of 2022.
“Despite price increases of 20% over the past year, the analysts at Goldman Sachs suggest that homes remain ‘relatively affordable’ thanks to historically low mortgage rates,” CNN Business reported. “But continued strong demand among buyers and ongoing low inventory will keep pushing prices even higher, according to the report.”
While the home inventory situation has improved, with more homes for sale and price growth moderating a bit, Goldman's analysts say the supply and demand imbalance is expected to continue through next year, according to the report.
“But it is questionable whether demand will remain as strong going forward, given the high prices. About two-thirds, 66%, of respondents to a University of Michigan survey on homebuyer sentiment said this is not a good time to buy a home, according to the report,” CNN Business reported. “That's the highest it has been since the early 1980's.”
‘Reluctant Bulls’
Goldman’s analysts described homeowners remain “reluctant bulls,” who still intend to buy despite thinking it's a bad time.
According to the Goldman Sachs, its model looked at supply, demand, affordability and home prices.
“It projects that strong demand and tight supply will gradually erode affordability and make homes so pricey that more people will drop out of the market,” CNN Business stated. “That reduced demand will ultimately allow for more inventory on the market and eventually the supply-demand imbalance will ease. But not before prices jump another 16% by the end of next year.”
In addition to home prices continuing to move higher, rents will continue to rise as well, the analysts said, and regulatory efforts from the White House, Congress or individual states or municipalities to alleviate the housing shortage may not be enough, CNN Business stated.
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