PHOENIX – Local economists are saying a recent report projecting a 2008-like plunge in the Phoenix housing market is no reason to panic.
The New York Post reported Tuesday that Goldman Sachs warned clients that the Phoenix; Austin, Texas; San Jose, California; and San Diego markets “will likely grapple with peak-to-trough declines of over 25%” in 2023.
However, Jim Rounds of Tempe-based Rounds Consulting Group said “the economic fundamentals are completely different now” than they were in 2008, when home prices fell 27% nationwide, sparking the Great Recession.
“We’re going to continue to have growth,” he told KTAR News 92.3 FM.
“We’re doing a great job adding employment opportunities for people, and so I’m not nearly as worried. So, ignore that report for now [and] expect home prices to come down a little bit more slowly.”
Danny Court, senior economist with Scottsdale-based Elliot D. Pollack & Company, said the Goldman Sachs projection for Phoenix in 2023 isn’t off base, but he sees it as a correction, not a crash.
He told KTAR News that Phoenix-area home prices have already fallen by over 10% from the May 2022 peak and could fall another 15% this year. That would return prices to the levels from the April or May of 2021.
“I don’t think anyone thought they were getting a good deal in 2021 on their home,” Court said.
“So, really … the reason that the percentages look so drastic is because we had such a drastic run-up in prices. So, this is a small reset.”
Another stark difference from the Great Recession era is the frequency of foreclosures. Court said the Valley had 8,000-10,000 foreclosure notices a month in 2008-09.
“We’re seeing about 200 to 300 a month now, and that’s a completely normal market,” he said.
KTAR News 92.3 FM’s Jim Cross contributed to this report.
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