During the pandemic, certain parts of the country saw significant spikes in real estate activity. Now, some of those very hotspots are experiencing the slowest growth in home prices as the uncertainty of the economy, and the high mortgage rates are converging.

Examples of pandemic boomtowns seeing slowdowns in home price increases include Austin, Boise, and Phoenix.

In Austin, the median price per square foot was up just 1.3% year-over-year in October. That represents a decline of around 24% year-over-year in February when mortgage rates were still somewhere under 4%, and that was near record lows.

In Phoenix, the price per square foot went up 29% in February, and now it’s up just 6% from a year ago, representing a 23-percentage point drop.

Those are among the most significant drops in 99 of the country’s most populous metros when looking at the period from February 2022 to October 2022. Redfin, where the data comes from, compared February to October because the housing market was considered at the peak of competitiveness and demand at the start of that period.

Other cities where there are major declines in the year-over-year change in price per square foot ranging from -22 points to -19 points include:

• San Jose, CA
• Las Vegas, NV
• Boise, ID
• Oakland, CA
• Sacramento, CA
• Riverside, CA
• Colorado Springs, CO
• Seattle, WA

During the pandemic, Austin and Phoenix both saw tremendous influxes of people moving to the area. Remote workers were moving from expensive coastal cities to Sun Belt cities, which are significantly more affordable in most cases.

In 2021, Phoenix, Austin, and Las Vegas were all metros that saw the newest residents. On Redfin’s list of the most popular destinations for homebuyers from out of town, Phoenix, Las Vegas, and Sacramento remain high-ranking.

Boise and the suburbs have been among the country’s fastest-growing cities in the past few years, with many residents coming from California.

People from more expensive places, including California, tend to have bigger homebuying budgets, driving up prices.

In Phoenix, home prices have increased more than 30% over the last few years. In that city, as well as Austin and Boise, the typical home sells for almost $500,000.

An economist for Redfin said that the forces causing a slowdown in the overall housing market, including mortgage rates rising, are having a more significant effect on places such as Boise and Austin when they saw home prices soaring so much over the past few years. Home costs can go up by double-digit figures for only so long before it’s no longer sustainable.

Additionally, many people who wanted to move to these cities have probably already done so.

Unfortunately, for locals in places like Austin and Boise, homes are no longer affordable because of the pandemic buying boom.

That said, while affordability is still a concern, it could be that a buyer’s market emerges in some of the pandemic hotspots. Some first-time homebuyers will have the chance to buy without competing with out-of-towners and investors with big budgets.

Since prices and rates are so high, buyers are starting to offer below the asking price and negotiate with sellers on rate buydowns. They’re also increasingly considering new construction because builders are incentivizing them with rate buydowns to get rid of their inventory.

Home prices are also cooling in tech hubs like Oakland, San Jose, and Seattle. In San Jose, the median price per square foot fell around 2% in October, whereas in February, the growth rate of prices was 20%.

Finally, metro areas in the U.S. where price growth is accelerating include Albany, NY; Bridgeport, CT; McAllen, TX; Milwaukee, WI and Wilmington, DE. They saw increases in their year-over-year change in price per square foot from February to October, ranging from two to eight percentage points.