To better understand which regional housing markets might see a price decline, Fortune reached out to CoreLogic. The California-based real estate research company provided us with its assessment of close to 400 metropolitan statistical areas.
CoreLogic, which ranks No. 952 on the Fortune 1000, put housing markets into one of five categories based on the likelihood that home prices in that particular market are to fall over the coming 12 months. Here are those groupings:
Elevated: Over 40% chance of a price dip
High: 30–40% chance
Medium: 20–30% chance
Low: 10–20% chance
Very Low: 0–10% chance
Among the 392 regional housing markets that CoreLogic measured, it puts 86% into the "very low" or "low" likelihood of a price decline. It put 10% of markets into the "medium" grouping and 1% in the "high" grouping. Meanwhile, CoreLogic places only 2% of markets into the "elevated" group. The markets in the elevated grouping—the highest odds of a price correction—include Hartford; Kalamazoo; Lewiston, Maine; Mount Vernon, Wash.; Muskegon, Mich.; Olympia, Wash.; Salem, Ore.; and Honolulu.
Even in the face of soaring mortgage rates, CoreLogic still thinks the chances of prices declining in 2022 are fairly low. Why? The real estate research firm points to the mismatch between inventory and strong buyer demand. That's also reflected in its national forecast. Over the coming 12 months, CoreLogic predicts U.S. home prices are poised to rise 5%. That'd mark a deceleration from the 19.8% jump posted over the past 12 months, but it's hardly the relief priced-out buyers are seeking.
However, that doesn't mean CoreLogic views the ongoing housing market boom as healthy.
CoreLogic also calculated whether local income levels could support local home prices. The finding? CoreLogic says 65% of U.S. regional housing markets are "overvalued." That includes every major market in states like Arizona, Florida, and Texas. Just 9% of regional housing markets are what CoreLogic deems "undervalued"; 26% get its "normal" label.
Increasingly, industry insiders are rooting for spiking mortgage rates to rein in the unsustainable levels of home price growth. That includes Logan Mohtashami, lead analyst at HousingWire. He'd like to see soaring mortgage rates cause some homebuyers to pause their search. If that happens, inventory could finally get the breathing room it needs to rise again.
"It's too many people chasing too few homes; we desperately need a breather," Mohtashami says.
If you’re hungry for more housing data, follow me on Twitter at @NewsLambert.