Home buying hot spots like San Jose and Sacramento have flourished. They are most at risk of a housing downturn as fears of an economic recession spread.
"If the U.S. enters a recession, we're unlikely to see a housing-market crash like in the Great Recession because the factors affecting the economy are different," Sheharyar Bokhari said in a housing report. Some local housing markets would be affected more by a recession than others.
In order to rank cities on their chances of a housing market downturn in the event of a US recession, researchers looked at a number of indicators. As the broader economy tightens, some home values may decline leaving homeowners with a mortgage for more than their investment.
It is most likely to happen in popular migration destinations as demand from relocators and second home seekers tends to fall during an economic downturn. Last year's Pandemic-driven boom has caused demand for vacation homes to fall.
Taylor Marr said in a statement that buyers are quicker to back away from second homes than primary homes. This opens up the market for buyers who want to stay and negotiate a lower price.
Cities with rapid rising home prices are more at risk of a downturn. The Rust Belt region's less trendy and more affordable markets are still unaffected. If the US enters a recession, real estate investments in these areas could be in better shape.
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