Nadia Evangelou, senior economist for the National Association of Realtors, sees a rebound coming.
Easing inflation will bring mortgage rates down, and tight supplies will send prices higher.
In her view, the US will avoid both the recession and housing crash that others have forecasted.
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While some experts have warned of an impending US housing crash, Nadia Evangelou, senior economist and director of research at the National Association of Realtors, anticipates the opposite.
Home prices and sales will dip this year, but she anticipates a rebound in 2024 with sales rising and limited supplies sparking price gains.
“It seems that home sales activity has bottomed out, and 2023 will be the turning point for the housing market,” Evangelou told Insider. “We don’t expect any housing crash.”
In fact, some indicators are already turning positive. The NAR’s pending home sales index has ticked higher for two consecutive months and saw its largest monthly increase since June 2020.
To be sure, the Mortgage Bankers Association said mortgage rates are continuing to rise, and a hawkish stance from the Federal Reserve will put more pressure on borrowing costs.
But Evangelou said inflation could soften faster than expected this year, and the US will avoid a recession. That will lead to mortgage rates falling back toward 6% after they topped 7% in October.
“Back in 2008, we had an oversupply of homes by like 4 million, but now we have less than 1 million,” Evangelou said. “And this is the main factor that keeps home prices from falling.”
On the demand side, she said it will stay elevated, helped by the robust labor market. So even though there are relatively few buyers now amid low inventory, housing demand continues to outpace supply, Evangelou said.
While higher interest rate expectations are weighing on homebuying activity, Evangelou anticipates the trend to ease in the latter half of this year.
NAR forecasts that there could be up to an 11% drop in home sales this year. Then in 2024, activity could jump by about 18%, she said.
Similarly, home prices should drop about 2% this year, then rise about 3% to 4% next year, she added. That’s much more upbeat than other forecasts.
Dallas Fed economists said in a recent paper that for the housing market to return to its fundamentals, a 19.5% correction would be necessary.
Goldman Sachs, meanwhile, said home prices nationwide will fall 6.1% this year. And next year, cities like Austin, Seattle, Phoenix, and San Francisco could see prices dive by more than 12%, strategists said, given their large increases in inventory.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
