(NEXSTAR) – Goldman Sachs is predicting dark days in 2023 for some of the pandemic’s red-hot U.S. housing markets.

The investment bank shied away from predicting a nationwide crash, but warned that residents in four cities in particular could see plummeting values that echo the 2008 housing collapse, according to a note to clients obtained by the New York Post.

The “overheated” markets mentioned in the note were: San Jose, California; Austin, Texas; Phoenix, Arizona; and San Diego, California.

Goldman now believes that interest rates will remain high longer than expected, and notified clients that the bank is raising its forecast for the 30-year fixed mortgage rate to 6.5% for year-end 2023.

September 2022 marked the first time since the 2008 housing crisis that the average long-term mortgage rate surpassed 6%.

High mortgage rates, combined with soaring home prices, are currently driving some buyers away and contributing to a cooling housing market.

Austin, ranked the hottest real estate market in the U.S. in 2021 by Zillow, has fallen to 30th for 2023. The company’s report called the market “ice cold” and stated that homes are now spending an average of 68 days on the market, more than any other major U.S. metro. The Austin Board of Realtors has pushed back against the report, saying that there is still “incredibly high demand.”

But just how bad could things get in 2023?

Prices are expected to fall less than 2% in cities like New York and Chicago, according to Goldman, and even grow in others, like Baltimore and Miami.

In cities where valuations have drifted far from fundamentals, the decline is expected to be far more devastating, according to the note.

“This [national] decline should be small enough as to avoid broad mortgage credit stress, with a sharp increase in foreclosures nationwide seeming unlikely,” Goldman Sachs wrote. “That said, overheated housing markets in the Southwest and Pacific coast, such as San Jose MSA, Austin MSA, Phoenix MSA, and San Diego MSA will likely grapple with peak-to-trough declines of over 25%, presenting localized risk of higher delinquencies for mortgages originated in 2022 or late 2021.”

National Association of Realtors Chief Economist Lawrence Yun said in his 2023 forecast that he sees “hopeful signs” for the country as a whole and expects housing prices to be flat on average.

“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. The exceptions, however are markets like the San Francisco Bay Area, where San Jose is located, which he predicts will see potential 10-15% drops in 2023.

“Mortgage rates are the lifeblood that drive home sales,” Yun said. The average rate on a 30-year loan was 6.15% this week, nearly a full point below the 7.08% high of September 2022.

The same rate was 3.56% at this time last year, according to Freddie Mac.