The housing market isn’t just running hot—it’s running red-hot. The inventory crisis, which has seen homebuyers outnumber sellers by a wide margin during the pandemic, is worsening. Bidding wars are up to a new all-time high, and every single major forecast model shows home prices rising nationally this year.
That said, there are a few regional housing markets that could buck the national trend and actually post declining home values this year. That’s according to an analysis released this week by CoreLogic, a real estate research firm ranked No. 952 in the Fortune 1000.
On Wednesday, CoreLogic provided Fortune the market risk calculation for 385 metropolitan statistical areas. Among those markets, CoreLogic rates 13 markets as having a “high” likelihood (between a 50% to 75% probability) of declining home prices in the coming 12 months. Those 13 markets include Niles, Mich.; Lake Havasu City, Ariz.; Chico, Calif.; Lewiston, Maine; Modesto, Calif.; Muskegon, Mich.; Pittsfield, Mass.; Prescott, Ariz.; Worcester, Mass.; Bend, Ore.; Kalamazoo, Mich.; Merced, Calif.; and Springfield, Mass.
Why are these 13 housing markets facing the prospect of declining home values at a time when home prices are soaring nationally? According to the analysis, they’re all close to “overheating.” In other words, buyers in some places might be ready to push back at record prices.
“With robust home price growth since the onset of the pandemic, many markets could now [be] considered overvalued, particularly when comparing the price growth to the rate of local income growth,” Selma Hepp, deputy chief economist at CoreLogic, told Fortune.
Even if home prices fall in these 13 regional housing markets, it would hardly be enough to drag down the national housing market. After all, the combined population in these 13 markets is 3.8 million—or just above 1% of the country’s population.
“Despite high home prices, the risk of [national] home price decline over the next 12-month period remains low due to the low unemployment rate, in-migration of population with higher incomes, and a low debt service ratio. Mortgage debt service payment as a percent of disposable personal income is at the lowest rate going back to at least 1980,” Hepp said.
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