Fed Chair Jerome Powell has made it clear: The central bank is done sitting on the sidelines as inflation chips away at the value of the dollar. The plan? Put upward pressure on interest rates until price growth relents.
Historically speaking, that inflation fighting playbook is particularly hard-felt in the housing market, where spiking mortgage rates can quickly price out homebuyers. That’s already starting to happen. On Thursday, the average 30-year fixed mortgage rate hit 5.11%—up from 3.11% in December. A borrower who took out a $500,000 mortgage at a 3.11% rate would owe $2,138 per month. At a 5.11% rate, that monthly payment on a 30-year mortgage spikes to $2,718.
While the swift move up in mortgage rates is undoubtedly putting downward pressure on the housing market, it doesn’t mean home prices are about to crash. In fact, every major real estate firm with a publicly released forecast model, including Fannie Mae and Zillow, still predict home prices will climb further this year.
That said, industry insiders tell Fortune there’s increasingly a chance that the economic shock caused by soaring mortgage rates could see home values fall in some overpriced housing markets.
To better understand which regional housing markets might see a price decline, Fortune reached out to CoreLogic. The California-based real estate research company provided us with its assessment of close to 400 metropolitan statistical areas
CoreLogic, put housing markets into one of five categories based on the likelihood that home prices in that particular market are to fall over the coming 12 months. Here are those groupings:
- Elevated: Over 40% chance of a price dip
- High: 30–40% chance
- Medium: 20–30% chance
- Low: 10–20% chance
- Very Low: 0–10% chance