With interest rates going upwards, Goldman Sachs declared that the decline of the company will get worse and even prolong through the whole year.
As tension grew around the company, Goldman Sachs mentioned four American cities that needed to gear up their pace for a seismic reduction compared to that of the 2008 housing crash.
The four companies are – San Jose, California; Austin, Texas; Phoenix, Arizona; and San Diego, California would face a boom and bust decline that may go up more than 25%.
This kind of decline would compete with the decline that happened 15 years ago during the time of the Great Recession. According to the S&P CoreLogic Case-Shiller index, the United States fell 27% in home prices.
“Our 2023 revised forecast primarily reflects our view that interest rates will remain at elevated levels longer than currently priced in, with 10-year Treasury yields peaking in 2023 Q3. As a result, we are raising our forecast for the 30-year fixed mortgage rate to 6.5% for year-end 2023 (representing a 30 bp increase from our prior expectation),” the strategists say.
Furthermore, the mortgage rates have increased from 3% to 6% in the last year which set off the second notable home price correction after World War II post-era.
“This [national] decline should be small enough as to avoid broad mortgage credit stress, with a sharp increase in foreclosures nationwide seeming unlikely. That said, overheated housing markets in the Southwest and Pacific coast, such as San Jose MSA, Austin MSA, Phoenix MSA, and San Diego MSA will likely grapple with peak-to-trough declines of over 25%, presenting localized risk of higher delinquencies for mortgages originated in 2022 or late 2021,” writes Goldman Sachs.
The reason for Goldman to mention the four cities is that these cities separated themselves from fundamentals during the pandemic housing boom and therefore might see downward prices in the coming years.
Moreover, the company assumed that many Northeastern, southeastern and midwestern companies may witness a slight growth.
Previously, Goldman cut out as much as 90% payouts of employees. Many junior bankers who almost earned a six-figure income received just $10,000 or $15,000 even though they countlessly worked for hours.
The reactions varied from anger to stress and exhaustion as they received half of what they worked for. Many employees reported anxiety and depression after a sudden slash in bonuses.
“We all knew it was coming because of how much they are cutting back,” one worker told The Post on Thursday. “But it doesn’t mean it makes it easier.”