Years of soaring home prices have led to 96% of the largest markets in United States having overvalued real estate, according to a new analysis by Moody’s Analytics.
Most of the market now remains overpriced by about 25%.
That could lead to particularly sharp declines should the U.S. fall into a recession, warns Moody’s chief economist Mark Zandi in an interview with Fortune. In such a scenario, he predicts national prices could decline by an average of 5%, with overheated markets possibly dropping 15% to 20%.
Here are the five U.S. cities most at risk.
Boise, Idaho
Boise, Idaho saw an enormous boost in housing prices during the pandemic. The country’s most overpriced city became a hotspot for technology workers relocating from expensive California cities after pandemic shutdowns. Now, Boise is 73% overvalued, according to Moody’s.
The city’s population grew by 3.3% from July 202 to July 2021 alone — the six highest among all U.S. metro areas.
The city was listed as the No.1 to live by Livability back in 2019, giving residents access to both the wilderness and a safe, affordable city. This helped fuel the increase of young homebuyers once the pandemic hit with the increase in remote work.
Colorado Springs, Colorado
Things have become heated in Colorado Springs, where a new clause was introduced to protect homebuyers. The clause prohibits…