Goldman Sachs says 4 US cities will suffer from 2008 crash in home values

Four US cities could see housing prices reach 2008 levels
Goldman Sachs predicts that apartment values ​​will worsen until 2023 against the backdrop of continued skyrocketing interest rates and falling housing prices.
The company wrote to clients earlier this month that it expects four US cities to suffer the most catastrophic declines, drawing comparisons to the 2008 housing crash.
San Jose, California; San Diego California; Austin, Texas; and Phoenix, Arizona, will likely see substantial increases before drastic declines of more than 25%.
These declines will be similar to those seen during the Great Recession of 2008. Housing prices across the US fell around 27% during that period, according to the S&P CoreLogic Case-Shiller index.
"Our revised forecast for 2023 primarily reflects our view that interest rates will remain at higher levels than the current price, with 10-year Treasury yields peaking in the third quarter of 2023," Goldman Sachs strategists wrote, according to the New York Post. "As a result, we are raising our forecast for the 30-year fixed mortgage rate to 6.5% by the end of 2023 (which is a 30 basis point increase from our previous forecast)."
In 2022, the mortgage interest rate jumped from 3% to 6%.
"This [national] decline should be small enough to avoid a broad mortgage credit squeeze, with a sharp increase in foreclosures across the country looking unlikely," Goldman Sachs wrote. "However, overheated housing markets in the Southwest and Pacific Coast, such as the San Jose Metropolitan Statistical Area, the Austin Metropolitan Statistical Area, the Phoenix Metropolitan Statistical Area and the San Diego Metropolitan Statistical Area will likely face record-low declines of more than 25 %, and will present a local risk of an increase in mortgage arrears originating in 2022 or at the end of 2021".
The bank says these cities will suffer the lowest prices this year because they have become too disconnected from the basics during the housing boom of the COVID-19 pandemic.
Goldman Sachs also predicts that many of the markets in the Northeast, Southeast and Midwest could see more modest corrections.
Home prices are expected to fall slightly in New York (-0.3%) and Chicago (-1.8%), while Baltimore (+0.5%) and Miami (+0.8%) will see higher prices, the company said.
"Assuming that the economy remains on the path to a soft landing, avoiding a recession, and the 30-year fixed mortgage interest rate drops back to 6.15% by the end of 2024, housing price growth will likely move from depreciation to below-trend inflation in 2024," wrote Goldman Sachs.
The average 30-year fixed mortgage interest was 7.37% at its peak in November.