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Home Prices Are Rising Four Times Faster Than Incomes Across the U.S.

Housing Markets

Home Prices Are Rising Four Times Faster Than Incomes Across the U.S.

Housing experts are warning of market conditions that seem eerily reminiscent of the 2007 housing bubble and subsequent crash 

June 21, 2022
Housing graph trending down with red arrow

In the past year alone, home prices have risen four times faster than incomes across the U.S., leading the same economists who predicted the 2007 housing bubble to once again sound the alarm of another unstable market in 2022. Home shoppers aren’t just daunted by spiking mortgage rates in an already overpriced market, but many are now entirely blocked from making home purchases. To make matters worse, prices are still rising, says Fortune.

Among the nation’s 414 largest regional housing markets, 344 reported home prices in the first quarter of 2022 that are considered to be "overvalued" by more than 10%. Among those markets, 183 are overvalued by more than 25%, and 27 markets are overvalued by more than 50%, according to Moody’s Analytics.

This time around, the most "overvalued" home values are in Southwest, Mountain West, and Southeast markets that saw a flood of work-from-home workers during the pandemic. Boise and Phoenix, which were hotspots for expat Californians during the pandemic, are "overvalued" by 72% and 54%, respectively.

Heading forward, Moody’s Analytics chief economist Mark Zandi says frothy house prices should be a drag on future home price growth. Over the coming 12 months, Zandi predicts year-over-year U.S. home price growth will plummet from the record rate of 20.6% to 0%. In significantly "overvalued" housing markets like Boise and Phoenix, Zandi forecasts a 5% to 10% home price drop.

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