Real Estate Crash Will Be "Different This Time" . . . Right??

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A closer look at the 40 housing markets at risk of a 15% to 20% home price decline

Every quarter, Moody’s Analytics assesses whether local fundamentals, including local income levels, can support local home prices. At the latest reading, Moody’s Analytics finds 183 of the nation’s 413 largest regional housing markets are “overvalued” by more than 25%. In some of those overvalued markets, Zandi says, buyers and sellers can expect to watch home prices fall by 5% to 10% amid this housing correction.

However, in America’s most overvalued housing markets, Zandi predicts a 15% to 20% home price decline.

Earlier this month, published a list of the 40 regional housing markets most likely to see a 15% to 20% home price decline amid a recession. At the top of the list, Zandi says, are Boise; Colorado Springs; Las Vegas; Coeur d’Alene, Idaho; Tampa; Atlanta GA; Fort Collins, Colo.; Sherman, Texas; Jacksonville; and Idaho Falls, Idaho.

Renters in high-cost cities like Seattle WA and Boston MA simply couldn’t pass up the affordability of markets like Austin and Tampa. The ensuing pandemic housing boom saw markets like Austin and Tampa become overvalued by 61% and 45%, respectively.

In places like Austin TX, which was overvalued by just 7% in the first quarter of 2006, this feels very new. In other places, it looks eerily similar to 2006. Look no farther than Las Vegas NV and Phoenix AZ, which Moody’s Analytics rates as being overvalued by 53% and 54% in the first quarter of 2006. Now, Phoenix and Las Vegas are overvalued by 51% and 54%. That’s not something that real estate professionals in those cities—two of the hardest-hit in the 2008 housing bust—want to hear.