The Bottom Line: Home Prices Are Tumbling in These 10 Scorching Hot Real Estate Markets
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Homebuyers May Be Getting a Break in the Housing Market
For more than four years, home sellers have had the upper hand in the housing market. Now, buyers may finally be catching a break. A new report from Realtor.com shows that the median list price in September was down in more than half of the 50 largest metros, with some markets seeing declines of up to 12% year-over-year. This is in stark contrast to just a few months ago, when sales prices hit an all-time high. With home prices moderating, alongside lower mortgage rates and increasing inventory, the market may be turning in buyers’ favor.
Housing Affordability May Be Improving
Homebuyers have coped with a challenging housing market since 2020. The first two years of the pandemic brought record-low mortgage rates, allowing buyers to buy bigger, more expensive homes as borrowing costs tanked. But the ensuing buying boom caused home prices to soar as would-be buyers competed against each other and engaged in bidding wars. Starting in 2022, however, the market started to flip. Mortgage rates began quickly climbing, nearing 8% last October. With increased costs in both prices and financing, the lack of housing affordability hit a record low, pushing out many buyers and leading to a sluggish market. According to the National Association of Realtors, the number of sales last year was 4.09 million homes — their lowest level in nearly 30 years.
Lower Mortgage Rates and Increased Inventory
Now, the market appears to be going through another shift. Mortgage rates, which had been hovering over 7% for most of the year, are now in the low 6% range. Those lower borrowing costs have increased affordability for many buyers with tight monthly budgets. Home sellers are also being more flexible when negotiating a sale. Realizing that homes are sitting on the market longer and that they can no longer expect multiple offers to push prices significantly higher, homeowners are listing at more reasonable starting prices and are more willing to compromise. According to listing site Zillow, 22.4% of for-sale homes in April had price cuts, the highest percentage in six years.
10 Markets with the Biggest Drops in Home Prices
Some of the more popular cities for homebuyers looking to relocate are seeing the biggest changes in home prices. Here are the metros with the biggest year-over-year price declines:
- Miami, Florida — 12.4%
- Cincinnati, Ohio — 9.5%
- San Francisco, California — 8.9%
- Kansas City, Missouri — 8.4%
- Austin, Texas — 6.6%
- Jacksonville, Florida — 6.1%
- Denver, Colorado — 6%
- Orlando, Florida — 5.6%
- Tampa, Florida — 5.5%
- Nashville, Tennessee — 5.4%
Housing Market Shifts Possibly Bringing Opportunities for Buyers
The combination of lower mortgage rates and increasing inventory may be bringing opportunities for homebuyers. For those waiting for their dream home, easing home prices and mortgage rates are good news. However, buying conditions are still not as affordable as they were before the pandemic. Nevertheless, the market shift may be a significant turning point for homebuyers.
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