A swift uptick in mortgage rates is expected to result in economic shock which could ease red-hot housing prices in highly competitive markets, and according to Fortune, a real estate cooldown is already underway. Of 392 metropolitan areas studied by Moody’s Analytics, 96% are “overvalued” relative to local incomes, a common occurrence exacerbated by migrational patterns driving up the average income in markets like Boise, a popular hotspot for high-income California expats.
According to market economists like Mark Zandi, however, price to income discrepancies aren’t sustainable in the long term and will eventually lead to significant price deceleration as a growing number of buyers are priced out of overheated housing markets.
But the ongoing housing boom—which has seen home prices climb 34% over the past two years—could soon wind down. At least that's according to Mark Zandi, chief economist at Moody's Analytics.
At this point, Zandi doesn't foresee a national home price correction. However, he does believe some of the nation's most overpriced housing markets could see home prices decline up to 10% over the coming year.
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