Popular migration hotspots like Boise, ID, Phoenix, AZ, and Tampa, FL saw home prices soar to record highs during the pandemic, but they’ll also be the first to see values decline in the event of a recession, Redfin reports. Surging mortgage rates are already cooling down an overheated housing market, but a continued economic downturn will hurt some regional housing markets more than others. Northern metros like Cleveland and Buffalo, NY are still seeing relatively affordable prices in their local markets, making them the most resilient in a recession.
On the contrary, Riverside, CA is the most likely to see its housing market cool further if the U.S. enters a recession in the near future, followed closely by Boise and overpriced Florida metros like Cape Coral and North Port.
Like Riverside, many of those housing markets are popular migration destinations and/or places with rapidly rising home prices, both factors that are major contributors to their risk of suffering from a housing downturn. Additionally, Boise, Cape Coral, North Port, Las Vegas, Sacramento and Phoenix were all among the 20 fastest-cooling markets as of May, when mortgage rates approached 5.5%. That’s an indicator that prices are more likely to drop in many of those metros as the economy continues to contract.