But as high as prices are, they have yet to peak, according to a new report from Goldman Sachs.
The investment bank projects that home prices — already at record highs — will grow another 16% by the end of 2022. Despite price increases of 20% over the past year, the analysts at Goldman Sachs suggest that homes remain “relatively affordable” thanks to historically low mortgage rates. But continued strong demand among buyers and ongoing low inventory will keep pushing prices even higher, according to the report.
Sure, the inventory picture has improved a little since the spring, with more homes for sale and price growth moderating a bit. But Goldman’s analysts say this supply and demand imbalance is expected to continue through next year.
But it is questionable whether demand will remain as strong going forward, given the high prices. About two-thirds, 66%, of respondents to a University of Michigan survey on homebuyer sentiment said this is not a good time to buy a home, according to the report. That’s the highest it has been since the early 1980’s.
But homeowners today remain “‘reluctant bulls’, who still intend to buy despite thinking it’s a bad time,” Goldman’s analysts wrote.