The 5 Housing Markets Most Likely to Fall

Unhappy homeseller
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It appears that the red-hot housing market may finally be cooling.

Data from Redfin shows that the number of sellers lowering their prices is ticking up. As mortgage rates approach 5% — and appear likely to climb higher — home prices may moderate soon.

In some markets, they might actually decline. Recently, CoreLogic noted that a handful of markets appear to be headed for a likely price decline. Following are the top markets the firm says may be headed for a fall over the next 12 months.

Lake Havasu City-Kingman, Arizona

Lake Havasu
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Likelihood of a price decline: High (50% to 75% probability)

As we recently reported in “The 10 Most Overpriced Housing Markets in the U.S.,” a typical home sale in the Lake Havasu City-Kingman metropolitan area booked a jaw-dropping 72.1% profit during the third quarter of 2021.

A trend like that seems unlikely to last, and CoreLogic predicts it will not.

Prescott, Arizona

Prescott, Arizona
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Likelihood of a price decline: High (50% to 75% probability)

Prescott is another market that featured in our recent roundup of the most overvalued housing markets in the U.S. This city has been deemed to be the least affordable for housing in Arizona by the University of Arizona’s Eller College of Management.

But if CoreLogic is right, price relief may be on the way.

Bridgeport-Stamford-Norwalk, Connecticut

Bridgeport, Connecticut
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Likelihood of a price decline: Moderate (25% to 50% probability)

Three ZIP codes in the Bridgeport metro area saw average home values grow around 42% during the pandemic, according to data from Zillow. But the good times may not last for homeowners, with CoreLogic saying the chances of dipping prices are rising.

Urban Honolulu, Hawaii

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Likelihood of a price decline: Moderate (25% to 50% probability)

Home prices always seem to be high in Honolulu. A local official with the Hawaii Economic Association recently wrote that unless more affordable housing is built, the situation could turn “catastrophic.”

However, if CoreLogic is right, housing costs may become somewhat more manageable soon.

Hartford-West Hartford-East Hartford, Connecticut

Hartford, Connecticut
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Likelihood of a price decline: Moderate (25% to 50% probability)

Zillow says Hartford’s housing inventory ranks with the lowest of any city in the U.S. That lack of supply has sent prices soaring.

But the market may correct soon, according to CoreLogic.

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