There are plenty of ways to answer that question. You can count the number of bedrooms; whether it’s in a prestigious neighborhood near a safe city center or a far-flung suburb; and the quality of the schools. Low mortgage rates, such as the 3% to 4% bargains we mostly witnessed in early 2019, and even today’s mark of around 5%, can give prices a big lift, just as low Treasury yields boost stocks. But in determining whether home prices will drop in 2022 or 2023, the overriding force is rents. People won’t pay much more per month to buy a house than to lease one that’s extremely similar, or to rent a nearby apartment offering the same space (for more detail on the housing market outlook and why this isn’t 2008 all over again, check out this piece in Fortune‘s Quarterly Investing Guide). Americans have lots of choices in leasing a freestanding dwelling with a yard: Mom-and-pop owners and such big landlords as Amherst and Invitation Homes offer a total of 12 million houses for rent, and the industry is growing fast.

Hence, home prices make sense so long as they reflect the future trend in rents. In markets boasting potent job and population growth and little new construction—think San Francisco and San Jose—rents have tended to rise fast. The same is true in metros such as Jacksonville and Charlotte that attract lots of newcomers, but though building is active, new construction doesn’t match the hunger for housing. In those metros, the ratio of prices to rents, what we’ll call the “P/R,” tends to be much higher than average, just as the P/E for growth stocks exceeds the S&P norm. By contrast, in old-line cities such as Pittsburgh or Detroit where job growth is subdued, despite little new construction, the P/Rs are usually low. Put simply, the fundamentals say that buoyant markets merit, and can maintain, far-above-average P/Rs so long as their rents are rising fast.

A tale of three markets

For this story, I asked Dr. Michael Sklarz, president of Honolulu-based real estate research firm Collateral Analytics, to mine extensive price-to-rent data. Sklarz provided P/R figures for 22 years, from the start of 2000 to the close of 2022, for 24 metros. Sklarz declined to make an estimate for the U.S. as a whole because of the difficulty in assembling reliable rental data. But the numbers for the individual markets imply that nationwide P/R is significantly lower today than during the mania from 2005 to 2007. That’s an encouraging sign. Of the two dozen cities, 18 feature ratios below the average of those three years, some much lower, such as San Francisco, San Diego, New York, and Miami. Still, the picture varies widely by market.

Where will home prices rise in 2023?

The 24 metros for which Sklarz provides price versus rent data divide into three broad categories. (For actual yearly rents, I used numbers from Zillow’s public databases.) The first are cities whose P/R ratios are mostly low and pretty much in line with their two-decade norms, meaning they’re probably not overvalued. In addition, their rental profiles appear adequate to sustain their current P/Rs. Hence, prices in the future should rise modestly alongside rents. This group includes Boston, Detroit, Pittsburgh, Chicago, San Diego, and New York. Surprisingly, Los Angeles––where prices have flattened since early 2021––also looks safe since its P/E still hovers near its long-term average.

Where will home prices stay stable?

The second tier comprises mainly Sun Belt cities where the P/R ratios are high compared to history, but rents are advancing quickly. Notable examples are Atlanta, Tampa, Jacksonville, Las Vegas, and Miami, where rents increased by 30% or more since the July of 2019. The figures were a stunning 42% in Phoenix and 90% in North Port, Fla.

Where will home prices crash?

The third batch are the potential problem areas. In some cases, they include cities where prices have risen enormously but rental expansion is unimpressive. Topping the list are Denver and Seattle. The Mile High City’s P/R now hovers 44% above its 22 year average. Yet rents increased only 14% since mid-2019. As for Seattle, its multiple sits at 35% over its over two-decade midpoint, but it commanded just an 11% rise in rents in the past 19-month span. The air is also leaking from California cities folks are departing for the likes of Phoenix and Boise. San Jose has a big P/R, but rents are barely budging. San Francisco’s multiple is currently 16% higher than its norm, not alarming in itself. The problem is that as in San Jose, rents are going nowhere. Dallas occupies a neutral position: Its P/R is moderately high, and its rents are also growing modestly.

Two negative surprises are Austin and Houston, for different reasons. Austin’s a big-time destination for refugees from the coasts, yet its rental growth, though good at 23% in the past year and a half, may not be enough to prevent a drop or flattening in prices. Houston also sports a big P/R at one-third over its benchmark, but its rents rose a disappointing 12% since mid-2019.

What will the housing market look like in 2023?

The outlook for prices is different in the three tiers. For the first, primarily low-P/R group that includes Pittsburgh, Boston, and Detroit, multiples should hold steady, so that prices rise with rents in the low-to-mid-single digits. The second tier, comprising the Sun Belt stars, should keep rising even above the projected averages of 17% this year and 10% to 12% in 2023.

The cities with lofty P/Rs and slow rental growth, including Denver and Seattle, will lose to inflation. But with consumer prices now rising at an annual clip of over 8%, they could actually appreciate slightly in “nominal” terms while declining relative to inflation. Still, homeowners face a scenario they haven’t seen for years, where their home’s value lags behind the cost of living.