Moody’s: Housing Correction Coming – but No Crash

· by · in ,

NEW YORK – Moody’s Analytics Chief Economist Mark Zandi predicts that the latest Federal Reserve interest rate hike will cause a housing correction across the United States – but there won’t be a housing crash.

He suggests that the Southeast and Mountain West are the most overvalued housing markets, and the pendulum will swing back down. Cities and states due for a correction include Phoenix and Tucson in Arizona, the Carolinas, northeast Florida, and above all, Boise – “the most overvalued market in the country,” according to Moody’s analysis.

While a reduction in housing prices is likely, however, renters won’t see any immediate relief because homebuyers have few options even if values fall.

Zandi says the market likely won’t crash but the fundamentals remain strong: Vacancy rates are at an all-time low, mortgage underwriting quality is high, and most loans are “plain vanilla” 30-year or 15-year fixed-rate products. There’s no sign of subprime or negative amortization activity that precipitated the foreclosure crisis during the Great Recession.

“I just don’t see the kind of mortgage defaults and distressed sales that would be necessary for big declines in housing values,” Zandi says. “That’s when you get crashes, when you have lots of foreclosures and a lot of distressed sales. That’s just not going to happen.”

Source: Bloomberg CityLab (06/23/22) Capps, Kriston

And read these recent articles:
Economic commentary
Has Inflation Peaked?
Have Mortgage Rates peaked?
 Are we already in a Recession?
 Federal Reserve in Fantasyland: Implications for Housing Market
How far Behind the Curve is the Federal Reserve?
 Will the Federal Reserve show chutzpah today?
 Why are Mortgage Rates so high?

Other
How to protect your house from title fraud
Florida Lawmakers Pass Insurance, Condo Reforms
Florida Regulator: Insurers Can Offer Roof Deductibles
Expansion Plans for Fort Myers Airport
Guide to Buying and Selling in Southwest Florida

May Market Summaries
Naples May Market Summary
Bonita Springs May Market Summary
Sanibel May Market Summary
Fort Myers Beach May Market Summary
Estero May Market Summary
St James City May Market Summary
Estero May Market Summary

  • Andrew Oliver, M.B.E., M.B.A.
    Real Estate Advisor
    Andrew.Oliver@Compass.com
    www.TheFeinsGroup.com
    www.OliverReportsFL.com
    m: 617.834.8205
    ———-
    800 Laurel Oak Drive, Suite 400, Naples, FL 34108
    ———-
    Licensed in Massachusetts
    www.OliverReportsMA.com

If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, please contact me on 617.834.8205 or Andrew.Oliver@Compass.com.

Tags: