The outlook for the nation’s housing market keeps deteriorating.
Earlier this year, Mark Zandi, Moody’s Analytics chief economist, told Fortune that several of the most overheated housing markets in the U.S. could see price declines of up to 5% within 12 months.
Moody’s subsequently revised its forecast downward, expecting many markets to see dips of between 5% and 10% within a year.
Now, Moody’s has revised its forecast yet again and shared it with Fortune. In all, 210 of around 400 of the largest regional U.S. housing markets were overvalued by more than 25% during the second quarter of 2022, Moody’s says.
Zandi tells Fortune that these markets can expect to see price declines of 15% to 30%, depending on the economy. According to Fortune:
“In ‘significantly overvalued’ housing markets, Moody’s Analytics now forecasts that home prices will fall between 15% to 20%. If a recession hits, Moody’s Analytics expects that U.S. home price decline to widen to between 25% to 30% in ‘significantly overvalued’ housing markets.”
By comparison, U.S. home prices declined 27% between 2006 and 2012.
In other words, what once looked like a minor housing price correction might end up rivaling the decline that triggered the Great Recession.
A handful of markets are overvalued by more than 60%, putting them at even greater risk of a correction. Following are the markets that are most overvalued and therefore most at risk for a big price decline, according to Moody’s.
Lake Havasu City-Kingman, AZ
Home prices in this region are overvalued by: 60.46% as of the second quarter of 2022
Like other Arizona cities, Lake Havasu City has had its day in the sun. Now, however, the market in the city that became home to the relocated London Bridge is in danger of an eclipse, according to Moody’s.
Austin-Round Rock-Georgetown, TX
Home prices in this region are overvalued by: 61.1% as of the second quarter of 2022
Competition for housing in Texas’ capital city was fierce not long ago. Now, Austin is among “10 Housing Markets Where Bidding Wars Are Disappearing.”
Coeur d’Alene, ID
Home prices in this region are overvalued by: 62.6% as of the second quarter of 2022
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 Idaho city is in danger of a tumble.
Clarksville, TN-KY
Home prices in this region are overvalued by: 62.94% as of the second quarter of 2022
Things are cooling in housing markets across Tennessee. As a recent report from Middle Tennessee State University stated:
“A sign of uneasiness emerged in the corners of the housing market as reflected in significant drops in housing permit activities in Tennessee.”
Nashville-Davidson-Murfreesboro-Franklin, TN
Home prices in this region are overvalued by: 63.14% as of the second quarter of 2022
In August, we reported that Nashville was among the “10 Cities Where Home Inventory Is Rising Fast.” Growing inventory is a sign that the housing market in Music City may be about to hit a sour note.
Palm Bay-Melbourne-Titusville, FL
Home prices in this region are overvalued by: 64.07% as of the second quarter of 2022
Signs of trouble in the Palm Bay housing market emerged this summer, when the city was among “15 Markets With the Most Home Sales Getting Canceled.” Time will tell if things are about to get worse.
Flagstaff, AZ
Home prices in this region are overvalued by: 65.58% as of the second quarter of 2022
As far back as April, Flagstaff was identified as one of the “The 10 Most Overpriced Housing Markets in the U.S.” Today, it appears to be in danger of cooling fast.
Homosassa Springs, FL
Home prices in this region are overvalued by: 66.46% as of the second quarter of 2022
As with so much of Florida, housing values soared in Homosassa Springs throughout the COVID-19 pandemic. But the future looks a bit cloudier for housing in the Sunshine State.
Sherman-Denison, TX
Home prices in this region are overvalued by: 67.24% as of the second quarter of 2022
Real estate professionals in this market — located about an hour north of Dallas — said earlier this year that home prices were climbing because of the rising cost of construction.
However, a cooling trend may be headed toward housing in the Texas metro area.
Morristown, TN
Home prices in this region are overvalued by: 68.47% as of the second quarter of 2022
The county seat of Hamblen County, Tennessee, is another city in the state where housing values may not hold up for much longer.
Myrtle Beach-Conway-North Myrtle Beach, SC-NC
Home prices in this region are overvalued by: 70.11% as of the second quarter of 2022
Home sales dropped by double digits in August across South Carolina. So, even though homes in the Myrtle Beach area have been selling at a pace that is far above the national average, things may be changing.
Kahului-Wailuku-Lahaina, HI
Home prices in this region are overvalued by: 70.99% as of the second quarter of 2022
To many people, Hawaii is the ultimate paradise. But housing in this market on the island of Maui is in danger of a price correction, with prices island-wide recently slipping below a median of $1 million for the first time in 2022.
Muskegon, MI
Home prices in this region are overvalued by: 72.73% as of the second quarter of 2022
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.
Boise, ID
Home prices in this region are overvalued by: 76.9% as of the second quarter of 2022
As we recently reported, Boise sits atop the list of the “10 Housing Markets With the Most Sellers Dropping Prices.”
Moody’s says values here are way out of line with fundamentals, so a big tumble could be on the way soon.
Chris Kissell
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