This interactive map shows if your local housing market is impacted by the price correction

That affordability crisis has already pushed the US housing market into a housing crisis. Home sales are slowing down. Home builders are canceling projects. And real estate companies are turning to layoffs.

While it is clear that this ongoing downturn in the housing market – spurred on by the Fed’s fight against inflation – will cause a sharp decline in housing activity, it is less clear how it will affect house prices.

To better understand what’s going on with house prices, Fortune looked at monthly home values ​​as measured by the Zillow Home Value Index (ZHVI). In total, we looked at data for 896 regional US housing markets.

Let’s look at the Zillow data.

In May, Mark Zandi, chief economist at Moody’s Analytics, made a bold proclamation: The housing market would soon undergo a house price correction. So far he looks good. Of the 896 major regional housing markets tracked by Zillow, 117 saw home values ​​decline between May 2022 and August 2022.

The housing markets hardest hit by the house price correction fall into two groups.

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The first group includes bustling markets such as Austin (down 7.4%), Boise (down 5.3%), Denver (down 4.3%), Las Vegas (down 2.3%) and Phoenix (down 4.3%). decrease of 4.4%). Those markets saw entrenched buyers from cities like San Jose and Seattle drive prices far above what would historically support local incomes. That boom ebbed away as even wealthy out-of-town buyers were sidelined by high mortgage rates. That’s why markets like Boise and Austin are now teetering on full housing shortages.

But the biggest price drops are not in bustling markets. Indeed, the largest declines in home values ​​are found in expensive tech hubs such as San Francisco (-7.8%) and San Jose (–10.6%). Those markets suffered a double blow. Not only are their high-end real estate markets more price sensitive, but so are their technology sectors.

There is no doubt about it: rising mortgage rates are putting downward pressure on house prices. However, the ongoing home price correction has so far done little to wipe out gains from the Pandemic Housing Boom.

In fact, only Boise and Fairbanks recorded year-over-year declines in home values ​​between August 2021 and August 2022.

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Zooming out even further, the 2022 price drops in markets like Boise look even smaller — at least compared to the gains we’ve seen during the Pandemic Housing Boom. After taking into account the 5.3% price drop in Boise this summer, home values ​​on the market are still up 48.6% since March 2020.

But we could still see more profits disappearing from the Pandemic Housing Boom.

Research firms such as Moody’s Analytics, Zonda, John Burns Real Estate Consulting, TD Bank and Zelman & Associates expect the house price correction to continue to spread across the country. Bubbly markets in the Sunbelt, in particular, continue to be most at risk.

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“The Longer That” [mortgage] rates remain high, our opinion is that housing will continue to feel it and have this reset mode. And the affordability reset mechanism that needs to happen now is enabled [home] Prices. And so there are a lot of markets across the country where we predict house prices will fall by double digits,” said Rick Palacios Jr., head of research at John Burns Real Estate Consulting. Fortune.

Want to stay abreast of the downturn in the US housing market? Follow me on Twitter on @NewsLambert.

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