If you get your beak wet in the real estate business, chances are high that this will already feel like a personal depression. Soaring mortgage rates-saw Average 30-year fixed interest rate Jumping from 3.1% to 5.3% this year, boosting US housing market plunges into steepest decline since 2006Home sales and home construction are both declining rapidly.When Large real estate firms such as Redfin and Compass have already suffered layoffs.and mortgage divisions of financial companies such as JP Morgan When wells fargo.
Housing economists are naming what we see now. It’s an “upside down” housing cycle. In other words, the housing expansion that began in 2011 Replaced by downward slideThat said, lower housing activity does not necessarily mean lower home prices. On paper, the 2008 housing crash is an exception. Historically speaking, house prices have been incredibly sticky. Home sellers stick to the price they have in mind for as long as possible. Even during most recessions, home prices rise rather than fall.
As The housing cycle is “upside down” It’s fair to ask whether the housing market is headed for another historic anomaly, falling home prices, or its historic normal, rising home prices.
To find out, luck reached out to Moody’s Analytics to access the latest unique home analytics. A researcher at a financial information firm calculated how house prices could change in 414 regional housing markets between the fourth quarter of 2022 and his fourth quarter of 2024. did.
discover? Of the country’s 414 largest housing markets, Moody’s Analytics forecast models predict that home prices will decline in 210 over the next two years. 204 markets could see home price increases over the next two years.
Moody’s Analytics forecasting model predicts that The Village, Florida, is poised for the biggest drop in home prices. Between the fourth quarter of 2022 and the fourth quarter of 2024, home prices in The Villages will fall 12.8%, according to Moody’s Analytics. Punta Gorda, Fla. (-11.4% projected home price decline) is not far behind. Spokane, WA (-9.4%); Cape Coral, FL (-9.4%); Ocala, FL (-9.3%); Lake Havasu City, AZ (-9%); -8.2%); Missoula, Mont. (-7.7%), Palm Bay, Florida (-7.6%).
Most of these markets at risk of falling home prices are also where home prices have risen the most over the past two years. Now they are more vulnerable to homebuyer rebellion. Meanwhile, in the Florida market, where housing construction surged during the pandemic, The risk of oversupply is now increasingFailure of Florida homebuilders to sell unsold homes could lead to a temporary oversupply.
Of the 414 markets analyzed by Moody’s Analytics, Albany, Georgia is projected to see the biggest increase in home prices over the next two years. Moody’s Analytics forecasts that between the fourth quarter of 2022 and the fourth quarter of 2024, Albany home prices will rise 9.8%. Right behind Albany is Casper, Wyoming (8.0% projected home price growth). New Bern, NC (7.6%); Rocky Mount, NC (7.3%); Augusta, GA (7.2%); Hartford, GA (7.1%); ; Valdosta, GA (6.4%); Danville, IL (6.3%).
pandemic housing boom The U.S. housing market has moved away from the affordable housing market, historically speaking To historically inaccessible markets in just 24 months. After all, this is the main reason why the 210 market is vulnerable to falling home prices.
Each quarter, Moody’s Analytics conducts an analysis to determine whether home prices in the local housing market are supported by underlying economic fundamentals such as local income levels. The final reading was not pretty. By the first quarter of 2022, home prices nationwide are “overvalued” by 24.7%, according to Moody’s Analytics estimates. In other words, U.S. house prices are currently the furthest away from fundamentals since the housing bubble.
Just because it’s “overvalued” doesn’t mean it’s declining in the housing market. But the more “overvalued” home prices are, the more likely the market will see a price correction if the housing cycle is “flipped.” Of course, the fact that the housing cycle has finally “flipped” is why some economists are suddenly talking about the prospect of a price correction in the region.
In particular, markets like Boise (73% overvalued) and Phoenix (46% overvalued) are particularly vulnerable to falling home prices. Not only have these markets slashed prices for many locals, but their hefty price tags have also acted as a deterrent to those considering moving there.
Moody’s Analytics isn’t alone in predicting that home prices could fall in some local housing markets. Among the 392 largest markets in the country, CoreLogic estimates 98 markets as ‘likely’ or ‘very likely’ for home price declines over the next year.
But even if we’re seeing home prices fall in some local housing markets, that doesn’t mean we’re headed for a nationwide bankruptcy. core logic Predicting a fall in national housing prices. Unlike 2008, homeowners are in better financial shape this time around. Not to mention the shady subprime mortgages that endangered the financial system in 2008 have been outlawed.
Bill McBride, author of the blog Calculated Risk, says: luck He believes that pandemic boomtown markets like Phoenix and Boise, where home prices rose about 60% during the pandemic, could see home prices fall about 5% to 10% over the next year. But that’s not the end of the world, says McBride.
“So we’re still up 50%,” says McBride.
This story was originally Fortune.com