That type of looming loss explains why Redfin recently announced it’s shutting down its algorithm-run iBuyer business. As long as the U.S. housing market remains in correction mode, the math just doesn’t make sense.

“When the shiitake mushrooms hit the fan, you [investors] want to get out first. The way to do that is to figure out where the lowest sale is, and be 2% below that. And if it doesn’t sell in the first weekend, move it [the price] down [again],” Glenn Kelman, Redfin CEO, recently spoke The Sunday Review.

While flippers and homebuilders are scrambling to move inventory in markets like Las Vegas—where home values are down -6.93% since its 2022 peak—that’s not the story (at least yet) in every market. Many markets remain at their 2022 peak. Simply put: “shiitake mushrooms” Yet to hit “the fan” In every market.

You can find out more about the ongoing housing correction here The Sunday Review Reviewed the latest Zillow Home Value Index (ZHVI) data.

The home values of 219 homes in the 400 largest housing markets fell below their 2022 peak. Average decline was -2%

The home price correction is certainly going national but it continues to impact two markets more than others.

The first group being “significantly overvalued” Housing markets. These can be second home markets, boomtowns or places where home prices rose beyond what the local income can support.

Look no further than Austin, which Moody’s Analytics deemed in the second quarter as being “overvalued” 61.1% That amount of froth could explain why Austin home values fell 10.21% since 2022. Other cities are not far behind Austin. “significantly overvalued” Reno (where homes values are down by -8.47%), Boise (0.7.06%) and Salt Lake City (0.89%).

This second group includes high-cost areas along the West Coast. You will find places like San Francisco, Santa Cruz, and Seattle where home values are down by -8.18%, -7.58%, and -6.28% respectively. John Burns Real Estate Consulting states that these markets are highly sensitive to mortgage rates. They are often hit with a double blow: Their high-end realty markets are more rate-sensitive than their tech sectors.

219 major market prices are lower than their 2022 peak, but 181 markets remain at the 2022 peak. Zillow’s ongoing mortgage rate shock has not yet seen homes values fall in markets like Philadelphia and Baltimore, Virginia Beach, Oklahoma City and Richmond.

However, that doesn’t mean markets like Philadelphia and Virginia Beach won’t be affected by the home price correction. If mortgage rates remain elevated and unsold inventory—which nationally remains tight—continues to build, it could apply further downward pressure on home prices.

This is exactly what Moody’s Analytics anticipates.

Moody’s isn’t expecting a housing crash of the 2000s (which saw U.S. homes prices drop 27% from peak–to-trough), but it expects U.S. prices to plummet around 10% from peak–to-trough. Markets like Philadelphia and Virginia Beach will see drops of 14.2% or 5.3%. (Here’s the Moody’s outlook for the nation’s 322 largest markets).

These 2022 home price corrections may seem large on the one hand. These markets have been up big-time ever since the Pandemic Housing Boom.

Austin’s home value soared 75.36% from March 2020 to May 2022. Since then, the home value has experienced a -10.21% decrease. Austin’s pandemic home valuation gains are now at 57.46%.

Sign up to receive the Sunday Review Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.