A Goldman Sachs report found that four American cities, including San Diego, could see home prices decline so fast that we could see a housing market crash similar to the one in 2008.
A report from the investment bank Goldman Sachs found that San Diego; San Jose; Austin, Texas; and Phoenix were all likely to see sharp declines in home prices over the next year that could lead to a housing market crash similar to what the United States experienced in 2008.
In San Diego, home prices fell almost $100,000 in the past year according to CoreLogic, a California-based financial services company.“This is really still — because we still have so little inventory — it’s still technically a seller's market, but I think we’re still heading toward a more neutral market, which is great, but that comes with buyers being more selective on what they’re spending their money on because interest rates are higher,” said Jessica Tangen, a San Diego Realtor.
Home prices declining is not a surprise to many economists since the Federal Reserve increased interest rates during the past year to combat inflation. Some say the slowing housing market could be an indicator that a recession is on the horizon. “My prediction for 2023 is that we would have a 70% chance of a recession," said Alan Gin, an economist from the University of San Diego."It’s not certain, but it’s a strong possibility, and if we do have a recession, it would likely be caused by the Federal Reserve raising the interest rate and it impacting the housing market."
With home prices declining, there are fewer listings on the market and fewer sales. According to Redfin, sales in San Diego County were down almost 50% in December compared with the year before. A decrease in sales has also translated into homes being on the market longer. According to Redfin, the median number of days a home was on the market in December was 33 days, which is 21 days longer than a year prior.
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