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10 Markets Where Home Prices Could Plummet by 20%

Home selling price reduced
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If you are a homeowner, that quiet rumbling you hear could be the house settling a little.

Or it might be the first hint of an earthquake that will bring your home’s value tumbling to the ground.

Recently, Moody’s Analytics updated its proprietary analysis of U.S. regional housing markets and shared the findings exclusively with Fortune.

The picture isn’t pretty. After years of home prices soaring into the heavens, Moody’s now finds that house values nationwide are overvalued by 24.7%.

Mark Zandi, Moody’s Analytics chief economist, tells Fortune that several of the most overheated markets easily could see price declines of 5% to 10%.

However, the situation worsens if the nation falls into a recession. In that case, home values nationwide could slip by about 5%, and the most overvalued markets could plummet by as much as 15% to 20%.

Following are the markets most at risk for a big decline in hard economic times, according to Moody’s.

10. Jacksonville, Florida

Jacksonville, Florida
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Few states have seen housing prices balloon more than Florida over the past few years. It is among three states to have two markets on this list.

While housing values in Jacksonville may be particularly overheated, most of the nation has seen prices rise above what would normally be expected. According to Fortune’s recap of Moody’s findings:

“Among the 413 regional housing markets measured by Moody’s Analytics, the firm deems 96% are ‘overvalued.’ Simply put: Nearly the entire country has house prices that are higher than underlying fundamentals would historically support.”

9. Sherman-Denison, Texas

Sherman, Texas
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Home prices in this area — located about an hour north of Dallas — may be climbing because of the rising cost of construction.

Local real estate agent Tommi Homuth told television station KTEN:

“…(N)ew builds are costing more. I talked to an architect today, and he said it $205 a foot up to $215. He said he’s not pricing homes until he finishes because of the cost of goods.”

8. Fort Collins, Colorado

Fort Collins,
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The first of two Colorado cities on this list, Fort Collins recently placed No. 8 among the “10 Smaller Housing Markets That Are Now Red-Hot.”

7. Atlanta-Sandy Springs-Alpharetta, Georgia

The Little Five Points district in Atlanta, Georgia
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Atlanta always draws people in search of economic opportunity, but the city’s attractiveness also can push up prices. The city is among “15 Housing Markets Overvalued by More Than 50%.”

6. Tampa-St. Petersburg-Clearwater, Florida

Tampa waterfront homes with boats.
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Not only have housing values exploded in this Gulf Coast city, but rents also are skyrocketing, as we noted in “15 U.S. Cities Where Rents Have Risen the Most.” Northern residents moving south have pushed up housing costs in recent years.

5. Coeur D’Alene, Idaho

Coeur d' Alene, Idaho
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As we have reported, Idaho attracted more new residents in 2021 than any other state. All those new faces need homes, which pushes prices higher.

4. Phoenix-Mesa-Chandler, Arizona

Phoenix, Arizona
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Phoenix is No. 3 on the list of the “The 10 Most Popular U.S. Cities to Move To.” And, as in Idaho, when the number of new residents rises, so does the cost of housing.

3. Las Vegas-Henderson-Paradise, Nevada

Las vegas in daylight
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Las Vegas has been a fast-growing city for many years, and that helps support housing values. But the city saw prices implode during the housing bubble more than a decade ago, and it is possible that history could repeat itself.

2. Colorado Springs, Colorado

Colorado Springs, Colorado
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Colorado Springs recently has been among the “15 Cities Where Homebuyers Are Most Likely to Face Bidding Wars.”

In fact, things have gotten so out of control that buyers here insist on escalation clauses, stating how many thousands of dollars they are willing to exceed the top bid.

1. Boise, Idaho

Boise, Idaho neighborhood
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Boise is the poster child for red-hot housing prices. By at least one estimate, prices here are overvalued by an astonishing 70%.

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