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Housing prices could fall by up to 10% in many US cities, according to Fortune, citing a new report from Moody’s Analytics. However, the decline will not represent a nationwide correction in home prices, according to Moody’s chief economist Mark Zandi.
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On the contrary, according to Zandi, over the next 12 months, house price growth will reach zero year-over-year. Some of the most expensive housing markets will experience declines, he predicts.
Zandi attributes the market slowdown to rapidly rising mortgage rates in an already overvalued market. He doesn’t see current prices as representing a real estate bubble because market overvaluation doesn’t come with speculation, he told Fortune. However, he noted that he sees some “speculation creeping in” in markets like Phoenix and Charlotte, which are 46% and 33% overvalued, Fortune reports.
When a housing market is overvalued, it means house prices are higher than expected relative to average local incomes. Moody’s research has shown that 96% of the 392 metropolitan markets considered are “overvalued”, of which 149 are overvalued by at least 25%.
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Fortune also released an interactive chart showing the most overvalued markets. Values range from -6%, meaning home prices are lower than expected when factoring in local incomes, up to 73% in Boise, Idaho, the nation’s most overvalued city.
Some of the most overvalued cities (and regions) where house prices could drop 5% to 10% over the next 12 months include:
- Boise, ID – 73%.
- Sherman-Denizon, TX – 60%.
- Muskegon, Mich. — 59%.
- Morristown, TN – 57%.
- Homosassa Springs, Florida – 57%.
- City of Lake Havasu—Kingman, AZ—56%.
- Kahului-Wailuku-Lahaina, Hawaii — 55%.
- Dalton, Georgia — 55%.
- Flagstaff, AZ—51%.
- Pocatello, ID – 49%.
- Bremerton-Silverdale-Port Orchard, WA — 48%.
- Albany-Lebanon, OR – 48%.
- Idaho Falls, ID – 48%.
- Nashville-Davidson-Murfreesboro-Franklin, TN — 48%.
- Palm Bay-Melbourne-Titusville, Florida — 48%.
- Clarksville, TN/KY — 48%.
- Bellingham, WA—47%.
- Myrtle Beach-Conway-North Myrtle Beach, SC/NC – 47%.
- Phoenix-Mesa-Chandler, AZ—46%.
- Cleveland, TN—46%.
- Asheville, North Carolina — 46%.
- Flint, Mich.—46%.
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