Home prices have been among the strongest engines of the economic recovery from the short-lived COVID-19 pandemic-driven recession. Gross domestic product has risen most quarters since, although the past two quarters have been an exception. Even with the slowdown, home prices have risen nationwide, year over year, for each month in 2022.
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The home price upward movement has started to change, and the housing market is becoming much more challenging. The primary conclusion of the recent Zillow Home Value and Sales Forecast: July 2022 was that “its housing market outlook has been revised down from June. Zillow forecasts 7.8% home value growth over the next 12 months (July 2022-June 2023).”
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Zillow also has forecast that existing home sales this year will be 5.46 million, which is a 10.8% drop from 2021.
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Some markets already have started to experience declines in home prices. These are in cities where prices rose by well into the double-digit percentages over the past 12 months. A prime example is Boise. Prices rose by more than 30% in some months of late 2021 and early this year. Demand in the city has fallen sharply and, year over year, prices have started to fall.
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Home equity has been, and will be, a reason consumers will continue to consume or draw back from their spending. Homes are often the most valuable asset American families have. A darkening real estate market will make consumers more cautious. That, by itself, will be a major cause for a deepening recession.
Home Price Downdraft Deepens Recession
© Photo by Mark Wilson / Getty Images
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
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