Are House Prices Headed for a Correction or a Crash?

See what Mark Zandi, Julia Coronado and Deniz Igan have to say.

Mark Zandi, Moody’s chief economist, explained why he thinks U.S. house prices are headed for a correction and not a crash in an excellent 15-minute presentation to the IMF’s Global Housing Watch group. Zandi’s presentation also pinpointed areas of the country that may be more vulnerable than others to a crash – see the map in his presentation below to check out the most vulnerable areas.

In the roundtable discussion, Julia Coronado of Macropolicy Perspectives put forward an interesting view that the correction in the housing market this time may resemble the collapse of the tech bubble in 2000-01. In conversation with Richard Koss (Recursion), she said that it’s possible that the housing market could have a hard landing but the real economy could have a soft landing – see her reasoning below.

Deniz Igan of the BIS expanded the discussion to other advanced economy housing markets. She too felt that house prices were more likely to correct than crash, including because the booms are less credit-fueled this time around. But some countries were much more vulnerable than others – see the heat map in her presentation below to see how the U.S. housing market stacks up against the others.

The webinar also featured a Q&A with the participants and members of the IMF Global Housing Watch group.