Western housing markets—the epicenter of the home price correction—brace for another hit as Silicon Valley Bank’s collapse signals more tech pain

While Fed Chair Jerome Powell acknowledged last year that spiked mortgage rates would set off a "difficult [housing] correction," he didn't tell us it'd be a bifurcated correction. In some markets, like St. Louis and Boston, home prices are just a hair below their 2022 peak price, while many Western housing markets like Phoenix and San Francisco are passing through sharp home price corrections.

The reason it's a bifurcated housing correction boils down to the fact that Western housing markets are hypersensitive to interest rates. For one thing, Western markets are at risk of such pullbacks because home prices in those places are so far detached from local incomes. Second, Western markets have a high concentration of tech jobs, which are vulnerable to layoffs anytime interest rates get jacked up.