According to a new study published in Fortune, if the U.S. economy falls deeper into a recession, housing prices could dip by as much as 20% in 183 cities nationwide.
The data from Moody’s analytics reveal that 183 of the 413 top housing markets are “overvalued” by more than 25%. If the slump in the housing market continues, it could translate to a price decline of as much as 20% in those markets.
Talking about the overall market, the outlet quoted Moody’s chief economist Mark Zandi saying that home prices would either drop around 5% or stay the same.
According to Moody’s report, the Boise market is overvalued by 72%, and homes in Charlotte are overvalued by 66%. While in Austin, Texas, the real estate market is 61% above its actual value.
Fitch Ratings estimates prices are falling by about 15% nationwide, and economist Robert Shiller, who predicted the 2008 housing crash, estimates a decline of around 10%, the report indicated.
Last week, the National Association of Realtors reported that July existing home sales dipped 5.9% from June and 20.2% compared to the previous year, caused at least in part by rising interest rates.
The median existing-home sales price climbed 10.8% from one year ago to $403,800. That’s down $10,000 from last month’s record high of $413,800.
Earlier this month, housing industry advisor Zonda mentioned that the real estate market was slower than expected, moving from June to July, forecasting the shift in demand in response to higher borrowing costs and economic uncertainty.
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