Goldman Sachs housing forecast

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Half of homeowners ‘set and forget’ their home insurance—despite ‘record-breaking’ year of extreme weather link

• Almost half of homeowners neglect to review or update their insurance policies, despite a significant increase in weather-related disasters. Only 37% know the specific details of their coverage, leaving many underinsured.

• High-risk states like Florida, California, and Texas have more engaged homeowners, with 59% of them being concerned about needing insurance. In these states, insurance rates often drive 38% of homeowners to shop for better deals at renewal.

• Despite this, many Floridians remain uninsured, with 15-20% opting out due to high costs or dropped coverage. These areas face severe weather risks, including floods and hurricanes, exacerbating the financial strain on homeowners.

Ports strike underscores need for additional warehouse capacity link

• Since Q3 2020, over 2.5 billion sq. ft. of new industrial leases have been signed, driven by companies stockpiling inventory to avoid supply chain disruptions. These leases have been concentrated in key logistics hubs like the Inland Empire, Los Angeles, Atlanta, Chicago, and Dallas-Ft. Worth.

• By August 2024, over 219 million sq. ft. of warehouse space was available for sublease as companies adjusted to normalized supply chains. However, the East and Gulf Coast strikes have prompted businesses to reconsider relinquishing space, fearing further disruptions.

  

• As with the 2022 West Coast strike, shifts in port activity are anticipated, with imports likely to return to West Coast ports. This could increase inbound traffic at ports like Los Angeles and Long Beach in the coming months.

Q2 rents post second steepest drop in five years link

• In Q2 2024, median rent for newly constructed apartments fell by 6.2%, marking one of the sharpest declines in the last five years. The median rent now sits at $1,746, down from a peak of $1,889 in Q1 2022.

• The number of completed apartments surged by 18.7% in Q1 2024, reaching over 98,000 units, the highest level in more than a decade. This flood of new units is pushing rents down further as landlords compete with incentives.

• Cities like Austin, Dallas, and Nashville have seen significant rent drops, with Austin’s rents falling 17.6% in August year-over-year. One-bedroom rents dropped 9%, while studio rents bucked the trend with a 0.9% rise due to lower supply.

Home prices still rising, but pace is decelerating link

• U.S. home prices increased 0.1% from June to July 2024, but the pace is slowing, reflecting a deceleration in growth. Annual gains fell to 5% in July, down from 5.5% the previous month.

• The S&P CoreLogic Case-Shiller 20-City Composite Index showed a 5.9% year-over-year increase, with 12 of the 20 largest U.S. metros seeing month-over-month gains. Cleveland and Las Vegas had the biggest monthly jumps at 1.1% and 0.9%, respectively.

• New York saw the largest year-over-year price increase at 8.8%, followed by Las Vegas at 8.2%. Portland posted the smallest annual rise, with just 0.8%.

Goldman Sachs Says Housing Might Not Affordable For Another Five Years link

• US housing affordability has hit record lows, with a combination of high home prices and mortgage rates making it the worst since the early 1980s. Goldman Sachs predicts affordability won't normalize until 2030.

• Goldman Sachs expects mortgage rates to drop gradually over the next year, spurred by anticipated Federal Reserve rate cuts. However, housing price growth is still expected to continue, albeit at a slower rate.

• Wage growth outpacing inflation will help improve home affordability by the end of the decade. This could lead to a "slow normalization," but home prices are projected to increase by 4.4% in 2025.

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