Cities where home prices soared the highest during the pandemic housing rush are “most likely to see the effects of a housing downturn amplified and home prices decline” if the U.S. economy hits a recession.

That’s according to a new report from Redfin, which scrutinized the areas that are “most susceptible” to a housing downturn if a recession hits — a scenario that some economists believe looks likely amid stubborn inflation and stock market troubles.

At the top of Redfin’s list are what the real estate site called “popular migration destinations,” or housing “hot spots” where many Americans set free by remote work relocated.

The No. 1 city most at risk, Redfin reported, is Riverside, California. With an overall risk score of 84, Riverside has the highest chance of seeing its housing market cool further if the U.S. enters a recession,” more so than any other major U.S. metro included in Redfin’s analysis.

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Riverside, which spans from the eastern suburbs of Los Angeles like San Bernardino and Ontario through the Palm Springs area, “has highly volatile home prices and it was a hot destination during the pandemic, both for people permanently relocating and those buying second homes,” Redfin reported.

To those paying attention to housing markets in the West, a familiar city has been flagged again as a risky area: Boise, Idaho.

Boise — which exploded during the COVID-19 pandemic as Americans realized the metro had tempting housing opportunities at relatively lower price points compared to other states — is also cooling rapidly. It has a risk score of 76.9.

Here’s how the top 10 cities ranked

  1. Riverside, California — risk score of 84.
  2. Boise, Idaho — 76.9.
  3. Cape Coral, Florida — 76.7.
  4. North Port, Florida — 75.
  5. Las Vegas — 74.2.
  6. Sacramento, California — 73.1.
  7. Bakersfield, California — 72.2
  8. Phoenix — 72
  9. Tampa, Florida — 70.7
  10. Tucson, Arizona — 70.1

To determine which areas made the list, Redfin analyzed 98 major housing markets in the U.S. The ranking combines 10 indicators to come up with an overall risk score, with the highest possible score being 100 and the lowest 0.

The indicators Redfin considered are: home price volatility, average debt-to-income ratio, average home-loan-to-value ratio, labor market shock, percent of homes flipped, how much the housing market is “cooling” compared with other metros, year-over-year change in domestic migration, share of homes in the metro that are second homes, year-over-year price growth and elasticity of supply.

Where does Utah rank?

The Salt Lake City, Utah, metro area did rank in Redfin’s list in the No. 21 slot, with a risk score of 57.7.

That’s a more optimistic ranking than Boise, but still high compared to other metro areas — and that’s even though Utah ranked No. 1 and Idaho No. 5 in a recent CNBC report on the most “stable” housing markets in the U.S.

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So what gives?

Redfin’s report contemplates if the national economic tide turns and if the U.S. actually enters a recession. But this doesn’t necessarily mean these markets would see dramatic price declines like those seen after the 2006 housing bubble popped and banks’ risky lending practices caught up to them, sending the global economy into crisis.

As the U.S. economy cools, we’re already seeing home sellers slash their listing prices to adjust to a market that’s now shifting to be at least a little more buyer controlled. As mortgage rates have risen from their low rates of around 3% during the pandemic, buyers have adjusted what they’re actually willing to pay for a home, and motivated sellers are responding.

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While home prices in places like Boise and, yes, Salt Lake City have fluctuated to record levels, prices are starting to level off and even slightly dip as the market cools. In Utah, however, local housing experts say the state’s market is more stable and not likely to see dramatic price declines because Utah, with its rapid population growth and strong job market, has a history of a healthy economy in relation to the rest of the nation.

Plus, Utah has faced a crushing housing shortage for years now, which was driving home prices higher even before the pandemic rush accelerated the market.

Housing experts here expect home price growth to decelerate and “stabilize” — but not drop dramatically. Slight price drops, however, could be a possibility if the Wasatch Front continues to see falling sales for at least 18 consecutive months. June marked the 13th consecutive month, and July is likely on track to be the 14th.

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