A leading economist from Moody’s, Mark Zandi, says he believes the hot housing market is “historically overvalued” has reached its peak and will slow in the months ahead.
The American economy in the last two years, moved by complicated forces including pandemic-driven federal stimulus and economic displacement, had yielded a strange array of outcomes – including a challenging employment market and spiked housing demand. One notable economist predicts the latter effect has reached its zenith.
Moody’s Analytics chief economist Mark Zandi is ready to call it. He tells Fortune that we’ve officially moved from a housing boom into a “housing correction.”
“The housing market has peaked…everything points to a rolling over of the housing market,” Zandi says. “In terms of home sales, they’re falling sharply. Housing demand is coming down fast. Home price growth [will] go flat here pretty quickly; we will see [home] price declines in a significant number of markets.”
Looking at Maryland, housing indicators thus far for 2022 show growth over the year before, with both average and median prices rising over 8% – based on April 2022 statistics, the last available through the Maryland REALTORS website. This follows the 2020-2021 trend, where prices rose that year as well — up 11.2% on average, and 9.4% as a median.
Real estate represents the base for counties’ largest single revenue source, the property tax. In times of rising assessments, Maryland laws prevent those increases from taking immediate effect for tax purposes, through phased-in assessment increases and the Homestead Tax Credit which diminishes the tax effect of large movements in property values. Declines in assessments, however, do not reflect the same treatment under the law, and may have a more immediate effect on local revenues.