Salt Lake City has the most at-risk housing market for a home price correction in the nation, according to a new report by Morningstar, a leading investment research firm.

“Our risk scoring tool indicates that Salt Lake City is the most at-risk metro for home price correction. While the city has seen modest population growth, it’s become one of the least affordable markets, for-sale inventory is up nearly 50%, and average days on market is up over 300% year over year,” Morningstar researchers wrote, Fortune recently reported.

To rank risk for home price correction or price declines, Morningstar compiled data from the Atlanta Federal Reserve, U.S. Census Bureau and Zillow to create a risk scoring tool for metro-level home prices. They deemed metro areas “with the worst affordability, negative population growth, and rising for-sale inventory and average days on market, among other factors, as most at risk for home price corrections,” according to their report.

Morningstar researchers aren’t predicting a housing market crash like we saw during the Great Recession, but they are predicting national home prices will drop between 4% and 6% from their peak sometime in 2024, Fortune reported.

“Several factors today support continued price resiliency, mainly the rate lock-in effect, over a decade of conservative lending standards (which reduces foreclosure risk), and undersupplied U.S. housing stock (we estimate about a 2.5 million-unit shortfall),” Morningstar researchers wrote. “However, we believe that buyer exuberance during the pandemic, aided by ultralow borrowing costs, pushed home prices to an unmaintainable level in some markets.”

Two other Utah metros scored among the top 15 for highest home price correction risk: Provo and Ogden. The other metro areas deemed the most risky are San Diego; Austin, Texas; Colorado Springs, Colorado; Nashville; Oxnard, California; Seattle; Denver; Portland, Oregon; San Jose, California; Honolulu; Los Angeles; and San Francisco.

On the other hand, Morningstar researchers determined these 15 metros to have the lowest risk for price correction (almost all in the East): Hartford, Connecticut; Syracuse, New York; Allentown, Pennsylvania; New Haven, Connecticut; Harrisburg, Pennsylvania; Rochester, New York; Augusta, Georgia; Toledo, Ohio; Little Rock, Arkansas; Wichita, Kansas; Baton Rouge, Louisiana; Akron, Ohio; Cleveland, Ohio; Scranton, Pennsylvania, and Virginia Beach, Virginia.

It’s not the first time a slate of major Western cities have cropped up in a list of housing markets most at risk for a home price correction. Last year, after the U.S. housing market took a turn amid high mortgage interest rates as the Federal Reserve battled record levels of inflation, the West was the first and hardest hit.

This past spring, the U.S. housing market entered a new normal with stubbornly high interest rates over 6% and 7%, depending on the day. The result has overall been a fairly modest national home price correction, down only 2.4% in April from the June 2022 peak. But a deeper dive reveals a tale of two different housing markets. While Eastern cities have seen modest gains, the West has seen more dramatic declines.

Last summer, home sellers in Boise, Idaho, Denver and Salt Lake City began slashing their prices after more than two years of runaway home price growth amid the COVID-19-related housing rush, which sent buyers in a frenzy especially in the West as low interest rates, remote work opportunities and cheaper cost of living drove them out of big cities. Moody’s Analytics also eyed cities in Idaho, Arizona, and Utah as among the most “overvalued” as the U.S. housing market entered correction mode.

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While housing experts agreed Utah’s housing market would undergo a price correction heading into 2023, there was some debate about how deep it would run, especially considering Utah is a fast-growing state with a strong job economy and a longstanding housing shortage that could continue to pressurize housing prices long term.

So far, the Salt Lake City metro area has indeed been among the top housing markets in the U.S. to see the most dramatic yearly declines in home sales. That’s according to RE/MAX’s May National Housing Market Report, which surveyed 51 metro areas across the country. Local data reflect significant price drops too: In April, the median price for all housing types in Salt Lake County dropped to $495,000, a 10.8% decline year over year, according to the Salt Lake Board of Realtors. The median price for a single-family home was $577,000, down almost 9% from $633,000 in April 2022.

However, home sales also appear to be picking up steam heading into summer — even though inventory remains low with many sellers reluctant to give up their low interest rates from buying or refinancing during the pandemic housing frenzy. Even though the Salt Lake area’s housing transactions were down from May last year, they were up 10.6% from April, according to RE/MAX’s May report.

And while year-over-year prices are down, prices are showing modest upticks month-to-month since this winter. Salt Lake County’s $577,000 median price of a single-family home reflected a nearly 8% rise from $535,750 in January, according to the Salt Lake Board of Realtors.

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