Today's hot news: ‘Poison’ Ivy Zelman—the analyst who predicted the 2008 housing bust—sees U.S. home prices falling in both 2023 and 2024.

Hi everybody, Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee the sale of your home or I'll buy it! 

Ok, so every week, I share market data to keep you informed with the local real estate market.  

Here is this week’s Boca Market Watch.

First, Single Family Homes:

This past week, 70 new listings, not bad, and ranging in price from $360K to $9.6M!  15 homes back on the market, while 54 homes listed took a price decrease, and 3 sellers raised their asking price.  And like the the last couple of weeks, only 26 different properties under contract, and 23 going pending, just terrible! 29 homes were unsuccessful in selling and were taken off the market or the listing expired outright.  And a bad week for sales with 34 homes sold, ranging from $410K to $3M!

Next up, Condos and Townhomes:

57 new listings, not great,  and ranging from $140 Grand to $7.2 Million.  10 units came back on the market, 61 properties with a price decrease, that's a bunch, and 6 sellers with an increase.  And another poor week with 37 different properties under contract, and 34 going pending,  And 24 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. 45 closed sales this week, not good, and ranging in price from $120K to $1.9M.

Here's what's making news right now.

“Poison Ivy.” That’s what housing bulls called analyst Ivy Zelman, after she came out in 2005 and called the top of the housing bubble.

When Toll Brothers CEO Bob Toll tried to say the housing market had bottomed out in 2006, Zelman famously quipped back, “Which Kool-Aid are you drinking, because I want some.” Of course, Zelman’s housing-bust fears proved more than correct, and all those at the time who thought demographics would continue to propel home prices forward were proved dead wrong.

Fast-forward to 2022, and according to Fortune Inc, Zelman once again has housing bulls sweating.

Back in February,  Zelman  called the “peak” of the Pandemic Housing Boom. She was on the money again. Just weeks later, spiked mortgage rates pushed the U.S. housing market into a slowdown. This summer, as the housing correction intensified, Zelman provided a bearish assessment of U.S. home prices to clients of her boutique housing research firm.

“So right now we’re getting a backlash of the change in direction from free money to now the rise in [mortgage] rates and inflation. So the market is poised for a fairly significant [price] correction. And we’re already seeing signs of that over the last several months,” Zelman recently said on the Macro Hive Conversations podcast. “Inventories in certain markets—mostly on the West Coast, Southwest, and Mountain states—are rising at Mach speed.”

Zelman’s forecast model predicts that in 2023, U.S. home prices will fall 4%. Then in 2024 she predicts another 5% drop. “As fast as [inventory levels] are rising and demand is plummeting, we could see pretty substantial [home] price corrections. But it’s going to vary by market,” Zelman says. “I don’t think this will just end quickly. This is going to be a very pressured market nationally in 2023 and 2024.”

Zelman’s outlook amounts to a 8.8% drop in U.S. home prices between 2022 and 2024. Historically speaking, that would make this one of the three sharpest home price drops ever recorded. The other two being those from the Great Depression and Great Recession.

Not everyone agrees with Zelman’s bearish outlook, to be sure. Over the coming year, Zillow predicts that U.S. home prices will rise another 2.4%. Goldman Sachs predicts that U.S. home prices will rise 1.8% in 2023 and 3.5% in 2024. Meanwhile, firms like the Mortgage Bankers Association, CoreLogic, Fannie Mae, and Freddie Mac all still predict low single-digit home price jumps in 2023.

And as I reported last week, Michael Hurry, who predicted the Big Short, is saying we're in for an outright crash.

In our area, home sales are down 30% year over year. And pending sales, a leading indicator, are down 31% - that's a significant metric!  And our supply of months of inventory has essentially doubled to 3.3 months available.  Despite all that, prices were up 21% in July over a year ago.  That's just crazy, but it doesn't seem likely to continue unabated.  We'll just have to keep a close eye on these metrics.