Discovery Platform Notebook: CBSAs with the largest increases in price declines
House prices and the risk of house price decline are in the spotlight thanks to the recent increase in U.S. mortgage rates. CoreLogic collaborated with Fortune Magazine to provide insight into which markets have the greatest risk of house price decline in the next twelve months, resulting in the article: Odds of falling home prices in your local housing market, as told by one interactive map.
Given the complexity of this topic, there’s more to be learned when we dig deeper. Thankfully, uncovering the next layer of insight into this topic is easy with Discovery Platform by CoreLogic. Using the tools provided in the Discovery Platform, it is possible to examine CoreLogic’s Market Risk Indicator (MRI) model to better understand housing market risk as the housing market continues to soften.
The Fortune article provided estimates of house price risk as of July 2022. Using core-based statistical area (CBSA) level and time series data contained in the MRI dataset, we can extend the analysis and identify which CBSAs have experienced the greatest increase in house price decline risk in the 12-month period between July 2021 to July 2022.
The CBSAs with the largest increase in price decline risk over this period are:
| cbsa_name |
|---|
| Crestview-Fort Walton Beach-Destin FL Metropolitan Statistical Area |
| Bend-Redmond OR Metropolitan Statistical Area |
| Nassau County-Suffolk County NY Metropolitan Division |
| Grants Pass OR Metropolitan Statistical Area |
| Bellingham WA Metropolitan Statistical Area |
This can be compared with the CBSAs experiencing the greatest risk increase of price decline over the most recent six months in 2022:
| cbsa_name |
|---|
| Coeur d’Alene ID Metropolitan Statistical Area |
| Punta Gorda FL Metropolitan Statistical Area |
| Reno NV Metropolitan Statistical Area |
| Flagstaff AZ Metropolitan Statistical Area |
| Carson City NV Metropolitan Statistical Area |
The MRI model provides CBSA-level estimates of the probability of any level of house price decline in the upcoming 12 months. The Fortune article used this aforementioned metric.
But there is more data to unearth. It is also possible to use the MRI to focus on severe (greater than or equal to 10%) house price declines.
The table below shows that, as of July 2022, 242 CBSAs are predicted to have at least a 70% chance of any house price decline, while 11 CBSAs are predicted to have at least a 70% chance of severe house declines of 10% or greater.
| Probability of decline | Number of CBSAs experiencing any decline | Number of CBSAs experiencing ≥10% decline |
| More than 70% | 242 | 11 |
| 50-70% | 105 | 6 |
| 40-50% | 34 | 14 |
| 20-40% | 11 | 67 |
| 0-20% | 0 | 294 |
And while knowing how many CBSAs will experience declines is important, it is also important to know which ones are on the list. The CBSAs with the highest likelihood (10% or greater) of house price decline are as follows:
| cbsa_name |
|---|
| Coeur d’Alene ID Metropolitan Statistical Area |
| Crestview-Fort Walton Beach-Destin FL Metropolitan Statistical Area |
| Bellingham WA Metropolitan Statistical Area |
| Bend-Redmond OR Metropolitan Statistical Area |
| Boise City ID Metropolitan Statistical Area |
| Bremerton-Silverdale Metropolitan Statistical Area |
| Flagstaff AZ Metropolitan Statistical Area |
| Longview WA Metropolitan Statistical Area |
| Mount Vernon-Anacortes WA Metropolitan Statistical Area |
| Punta Gorda FL Metropolitan Statistical Area |
| Reno NV Metropolitan Statistical Area |
As the interim lead of CoreLogic’s Office of the Chief Economist, Selma Hepp indicated in the Fortune article, many of the areas with the greatest risk of price decline are in frothy markets where home prices rose above what local incomes can support long-term.
This kind of analysis used to take weeks, but with the Discovery Platform, this modeling only took about an hour. If you are already using Discovery Platform, contact your account manager to get access to the notebook and get tips on how to run further analysis. For more information on Discovery Platform, click here.