Prepare for a big drop in home prices in 2023.
That is the message from Mark Zandi, Moody’s Analytics chief economist. He recently told Fortune that home prices are likely to decline by 10% nationwide.
When seasonally adjusted, U.S. home prices sank 2.2% between June and September, placing that period in a tie for the second-biggest home price correction since World War II, according to Fortune.
The good news is that Zandi is increasingly optimistic the nation will dodge a “full-blown recession.” If so, that will keep a lid on price declines.
The bad news is that a 10% decline across the U.S. likely means that while some markets will fall less than that amount, others will decline by a lot more.
Moody’s is forecasting that 49 of the nation’s 322 biggest markets will see prices fall by more than 15%. But the decline is expected to be worst in the following 10 cities, where values could plunge by up to 24%.
10. Racine, Wisconsin
Home prices in this market are predicted to fall by: 18.5% from peak to trough
Earlier this year, prices in Racine were soaring faster and higher than in all but one other municipality among Wisconsin’s 100 largest.
That type of scorching growth is likely why Moody’s now is forecasting a big decline here.
9. Grand Rapids, Michigan
Home prices in this market are predicted to fall by: 18.6% from peak to trough
The housing supply in Grand Rapids has been growing rapidly in recent months.
As more inventory appears, the market becomes less competitive — and price drops might follow.
8. Crestview, Florida
Home prices in this market are predicted to fall by: 18.7% from peak to trough
As we have reported, CoreLogic has placed Crestview on the list of “5 Housing Markets at ‘Very High’ Risk of Falling.”
Moody’s agrees and is forecasting prices to fall by nearly 19%.
7. Cape Girardeau, Missouri/Illinois
Home prices in this market are predicted to fall by: 18.9% from peak to trough
This town that rests on the border between Missouri and Illinois may soon face a major housing price correction.
While falling home values don’t help homeowners much, Zandi tells Fortune they offer a silver lining:
“Before [home] prices began to decline, we were overvalued [nationally] by around 25%. Now this means [home] prices will normalize. Affordability will be restored. The [housing] market won’t be overvalued after this process is over.”
6. Flagstaff, Arizona
Home prices in this market are predicted to fall by: 19.1% from peak to trough
As far back as April, Flagstaff was identified as one of the “The 10 Most Overpriced Housing Markets in the U.S.”
Today, home prices appear to be in danger of falling by nearly one-fifth, according to Moody’s.
5. Coeur D’Alene, Idaho
Home prices in this market are predicted to fall by: 19.9% from peak to trough
Earlier this year, Coeur d’Alene was among the hottest small housing markets in the country.
A lot has changed in a short period, and this city is in danger of a tumble. It is not the only Gem State city to appear on this list either.
4. Boise, Idaho
Home prices in this market are predicted to fall by: 21.8% from peak to trough
In September, we reported that Boise sat atop the list of the “10 Housing Markets With the Most Sellers Dropping Prices.”
In hindsight, that was simply the beginning of what is likely to be a long-term trend. Moody’s says a big tumble could be on the way soon.
3. Pocatello, Idaho
Home prices in this market are predicted to fall by: 21.9% from peak to trough
In February, Greg Johnston, a real estate agent with Keller Williams Realty East Idaho, told the Idaho State Journal that Pocatello’s housing values had grown “too high and too fast” over the past three years.
He noted that the market traditionally had grown by no more than 5% annually but had seen price growth of up to five times that amount in recent years.
If Moody’s is right, a big correction is coming to the third Idaho city to make this list.
2. Muskegon, Michigan
Home prices in this market are predicted to fall by: 23.3% from peak to trough
This city known for fishing and boating on Lake Michigan has been riding a rising tide of home prices. But the wave might be about to crest in Muskegon.
1. Morristown, Tennessee
Home prices in this market are predicted to fall by: 24.1% from peak to trough
The county seat of Hamblen County, Tennessee, is another place where housing values may not hold up for much longer.
In fact, Moody’s expects values here to tumble by nearly one-quarter.
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