Expensive States Like California Could See Major Home Price Drops in the Year Ahead

As a housing correction slows the pace of home price growth across the U.S., expensive parts of the country are bracing for significant declines in the year ahead, says Insider. Lawrence Yun, chief economist at the National Association of Realtors (NAR), forecasts 0% home-price growth in 2023, and in states like California, home prices could fall between 5% and 10% as the housing market heads toward a recession.

While half of the country could see falling prices in the near future, a number of popular markets will continue to confront historically high home prices, especially as buyers compete for a limited supply of homes.

"The Midwest will hold on better because it's affordable," he said. "Southern states will hold on better because of job growth and in-migration."

He reassured, however, that the possibility of a 30% drop in home prices — which is roughly what happened during the housing-market downturn of 2006 to 2012 — is slim. There are just too few homes for sale, Yun said.

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