For many families, a property is their most important financial asset, and the swings and roundabouts of the real estate market often determine when it’s possible to upgrade to a bigger and better home.
The past 18 months of high interest rates have brought all the factors that influence property values into sharp focus.
While it’s important to view your home as a loving environment where you live or raise a family, it is also wise to retain focus on its value to you as a financial asset.
And this is why medium-term predictions from Goldman Sachs and the National Association of Realtors (NAR) should be of significant interest.
Goldman Sachs sees home values rising over the next four years, starting with an increase of 0.6% this year. During the following three years it predicts further rises of 3.8% in 2025; 4.9% in 2026 and again in 2027.
The supply of homes will remain reasonably tight, failing to reach the 5.34 million sales achieved in 2019 or the 6.12 million deals recorded during the Covid-fuelled boom of 2021.
While that’s not great news for buyers, it will help bolster values for owners.
Goldman Sachs predicts 3.83 million home sales in 2024, increasing to 4.24 million in 2025, 4.37 million in 2026 and 5 million by 2027.
Supporting the housing market will be a 1.5% increase in economic growth in 2024, ensuring America avoids a recession after the interest rate increases pushed mortgages beyond 7%.
NAR has also been busy making predictions for 2024, including the 30-year, fixed mortgage rate dropping as low as 6.3%.
It expects four cuts in interest rates by the Federal Reserve to stimulate the economy, which will also mean more renters will be able to afford to buy a median-priced home. It has named Austin, Texas, as America’s hottest real estate market this year.
In residential construction, NAR predicts 1.48 million new homes will be built.