As interest rates rise, the recession worsens, and inflation strikes fear in buyers, the housing markets are showing signs of a possible crash. Houses were also overpriced. People were buying enthusiastically after COVID when there was a shortage of homes for sale.
People should remember that there is a contagion market when housing looks like a bad investment. Â The fear of buying spreads if housing starts to look like a bad investment.
Back in May, Zandi at Moody’s boldly predicted that the housing market was facing a correction.
Through the summer, Zandi said, U.S. housing activity would plummet. As it did, Zandi said home prices in bubbly markets like Phoenix and Boise would begin falling.
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If a recession hits [it did hit], Zandi said, those significantly “overvalued” housing markets would likely see home prices slashed by 15% to 20%.
View this interactive chart on Fortune.com
Among the 413 regional housing markets measured by Moody’s Analytics, the firm deems 96% are “overvalued.” Simply put: Nearly the entire country has higher house prices than underlying fundamentals historically support.
Among the markets analyzed by Moody’s Analytics, 183 are “overvalued” by more than 25%. That’s up from 150 regional housing markets it deemed “overvalued” by more than 25% in the fourth quarter of 2021. The most “overvalued” markets are concentrated in fast-growing cities in the Mountain West and Sunbelt that benefited from the nation’s work-from-home boom. That includes both Boise (“overvalued” by 72%) and Charlotte (“overvalued” by 66%).
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