House prices will fall in these 210 housing markets, while these 204 markets will rise

If you wet your beak in the real estate business, chances are it already looks like a personal recession. Soaring mortgage rates – which have seen the average 30-year fixed rate rise from 3.1% to 5.3% this year – have pushed the US housing market into its fastest plunge in activity since 2006. Sales of houses and the construction of houses are falling rapidly. And the layoffs have already affected major real estate companies like Redfin and Compass, as well as mortgage services from financial firms like JPMorgan and Wells Fargo.

Housing economists have a name for what we are seeing now: a “turned over” housing cycle. This means that the housing expansion, which began in 2011, has been replaced by a downward slide. That said, just because real estate activity drops doesn’t mean house prices will drop as well. On paper, the housing crash of 2008 is an anomaly. Historically speaking, house prices are incredibly sticky. Home sellers hang on to the price they have in mind for as long as possible. Even during most recessions, house prices go up, not down.

As the housing cycle “turns around”, it makes sense to ask whether the housing market is headed for another historical anomaly, i.e. falling house prices, or the historical norm, i.e. i.e. rising house prices.

Discover, Fortune has contacted Moody’s Analytics for access to its latest proprietary housing analysis. Researchers at the financial intelligence firm calculated the likely development of house prices in 414 regional real estate markets between the fourth quarter of 2022 and the fourth quarter of 2024.

Discovery? Of the nation’s 414 largest housing markets, Moody’s Analytics forecast model predicts that 210 markets are on course to see house prices decline over the next two years; 204 markets are poised to see real estate prices rise over the next two years.

See this interactive chart on Fortune.com

Moody’s Analytics forecast model predicts that The Villages in Florida is about to experience the biggest drop in real estate prices. Between the fourth quarter of 2022 and the fourth quarter of 2024, Moody’s Analytics predicts that home prices in the Villages will fall by 12.8%. Not too far behind are Punta Gorda, Florida (-11.4% projected home price decline); Spokane, Wash. (-9.4%); Cape Coral, Florida (-9.4%); Ocala, Florida (-9.3%); Lake Havasu City, Arizona (-9%); Fort Lauderdale (-8.6%); Reno (-8.2%); Missoula, Mt. (-7.7%) and Palm Bay, Florida (-7.6%).

Most of these markets at risk of falling house prices are also the ones that have seen the strongest house price appreciation over the past two years. Now they are simply more vulnerable to a homebuyer revolt. Meanwhile, markets in Florida, where homebuilding has soared during the pandemic, are now at high risk of oversupply. If Florida homebuilders can’t unload their unsold homes, it could lead to a temporary oversupply.

Of the 414 markets analyzed by Moody’s Analytics, Albany, Georgia is expected to experience the largest increase in real estate prices over the next two years. Between the fourth quarter of 2022 and the fourth quarter of 2024, Moody’s Analytics forecast home prices in Albany to increase by 9.8%. Close behind Albany are Casper, Wyo (8.0% projected house price growth); New Bern, North Carolina (7.6%); Rocky Mount, North Carolina (7.3%); Augusta, Georgia (7.2%); Hartford (7.1%); Columbus, Georgia (6.6%); Farmington, New Mexico (6.5%); Valdosta, Georgia (6.4%) and Danville, Illinois (6.3%).

See this interactive chart on Fortune.com

The pandemic housing boom has seen the US real estate market go from a historically affordable housing market to a historically unaffordable market in just 24 months. Ultimately, this is the main reason why 210 markets are vulnerable to falling house prices.

Each quarter, Moody’s Analytics performs analysis to determine whether home prices in regional real estate markets can be supported by underlying economic fundamentals such as local income levels. The last reading was not pretty. During the first quarter of 2022, according to Moody’s Analytics estimates, national house prices are “overvalued” by 24.7%. This means that US house prices are now the farthest from fundamentals since the housing bubble.

Simply being “overvalued” does not guarantee that a housing market will see house prices fall. However, the more house prices become “overvalued”, the more likely the market is to see a price correction once the housing cycle “reboots”. Of course, the fact that the housing cycle has finally “turned around” is why some economists are suddenly raising the prospect of regional price corrections.

In particular, markets like Boise (which is “overvalued” by 73%) and Phoenix (“overvalued” by 46%) are particularly vulnerable to falling house prices. These markets have not only cost many locals dearly, but their high prices have also become a deterrent to people considering moving there.

See this interactive chart on Fortune.com

Moody’s Analytics isn’t the only company predicting that some regional real estate markets could see house prices plummet. Of the nation’s 392 largest markets, CoreLogic estimates that 98 markets have a “high” or “very high” likelihood of seeing house prices fall in the coming year.

But even if some regional real estate markets are seeing house prices plummet, that doesn’t mean we’re headed for a nationwide meltdown. Neither Moody’s Analytics nor CoreLogic is predicting a national decline in home prices. Unlike 2008, this time the owners are in better financial shape. Not to mention that the shady subprime mortgages that nearly brought the financial system to the brink in 2008 have been banned.

Bill McBride, author of the Calculated Risk blog, says Fortune he thinks pandemic markets in booming cities like Phoenix and Boise — where home prices have soared about 60% during the pandemic — could see home values ​​drop about 5% to 10% over the course of the year to come. But it wouldn’t be the end of the world, McBride said.

“So what? You’re still up 50%,” McBride says.

Want to stay up to date on the US real estate market? Follow me on Twitter at @NewsLambert.

This story was originally featured on Fortune.com

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