PHOENIX — Goldman Sachs expects record drops in Phoenix home prices similar to the 2008 crash.
Phoenix has been at the forefront of a booming housing market for nearly a decade now. But nothing lasts forever, and that rapid growth could finally be tapering off.
>> Live, local, breaking. Download the 12News app
Goldman Sachs, in a note to clients earlier this month obtained by the New York Post, predicted Phoenix, San Diego, San Jose, California, and Austin, Texas will see declines of more than 25%.
A 25% drop in home prices would be comparable to the 2008 recession, according to the Post. However, Senior Economist Danny Court of Elliott D. Pollack & Company tells 12News the two eras are not comparable.
There is not an excess housing supply, investors aren’t buying empty homes, and the market isn’t flooded with risky mortgages and foreclosures – all factors that caused the housing crash in 2008.
“We are at all-time lows going back 20 years in terms of foreclosure activity,” Court said.
Court generally agrees with Goldman Sachs’ prediction of a 25% drop in housing prices, though he says he believes the drop began at the peak of home values last May and will drop another 10%-15% this year.
“From peak to trough, we could see a 25% decline,” Court said. “We had such a high price appreciation the last three to five years that we would only be back down to 2021 prices. This is not a housing crash, and it’s nothing like ’08-’09.”
Court says another strong economic indicator is a hot job market.
“When people have a job, they are able to pay their mortgage,” he said.
According to Redfin, Arizona ended 2022 with a median sale price of $411,000.
At those prices, many buyers have been looking for alternatives, especially as some neighborhoods see nearly a 90% increase in the number of rental units.
Phoenix headed a skyrocketing housing market, but if Goldman Sachs predictions play out, it could be at the front of the fall.
>> VERSIÓN EN ESPAÑOL: Expertos predicen que el mercado inmobiliario podría venirse abajo a niveles del 2008
More ways to get 12News
On your phone: Download the 12News app for the latest local breaking news straight to your phone.
On your streaming device: Download 12News+ to your streaming device
The free 12News+ app from 12News lets users stream live events — including daily newscasts like "Today in AZ" and "12 News" and our daily lifestyle program, "Arizona Midday"—on Roku and Amazon Fire TV.
12News+ showcases live video throughout the day for breaking news, local news, weather and even an occasional moment of Zen showcasing breathtaking sights from across Arizona.
BoomTown
The Valley is growing but at what cost?