A lot of people were thinking 2023 was going to be the year they were finally able to buy a house. After years of record-setting price appreciation, would-be buyers often thought that with some economic slowing and other factors at play, the prices would drop, and they’d be able to enter the market.
In most places around the country, that’s not what’s happening. Despite economic uncertainty and rapidly rising interest rates, home values are still rising in many markets. Fewer people are willing to buy because of all the economic factors, but at the same time, the inventory of houses remains stubbornly low.
There are six places around the country, however, where prices aren’t just falling—some will say they’re plummeting.
So why are these cities on the decline regarding home prices while many parts of the country are seeing just the opposite?
Austin, Texas
Austin was one of the hottest real estate markets in the country and the world throughout the pandemic. Tech and remote workers were flocking to the Texas hotspot. Even years before the pandemic, Austin was booming and drawing in huge numbers of new residents.
Austin saw big price increases because so many out-of-state residents were coming to the city to take advantage of new economic opportunities, a growing tech sector, and a relatively affordable cost of living.
Since its peak in 2021, the housing bubble in Austin has started cooling, and now more recent listings to hit the market are seeing big price cuts. More than 25% of homes listed for sale have seen prices drop to attract buyers.
The demand has dried up in many ways, especially for people from expensive cities like San Francisco to find a deal. Austin’s high housing prices turn many off at a time when interest rates are high, so listing prices are getting cut in response.
Phoenix, Arizona
Phoenix was one of the hardest-hit cities in America in 2008 during the Great Recession. The area saw housing prices drop by more than 50%, and homeowners were finding themselves underwater or in a situation where they had to foreclose. Then, Phoenix had another huge pandemic boom in real estate.
Now it appears Phoenix is back in a bust phase of its tumultuous real estate market. Goldman Sachs predicts the Phoenix market will see a 25% drop in home values, mostly because of the overinflated current prices.
Almost ¼ of listed homes in February 2023 cut their prices.
Seattle, Washington
Over the past couple of decades, Seattle has grown tremendously. It’s home to some of the world’s biggest tech companies, including Amazon, and as a result of the economic boom, Seattle saw home prices go up much faster than many other cities. In 2022, the median home prices went up to almost $900,000.
Inflation, rising rates, and other factors have led to a decline in demand in Seattle, and now median home prices are around $800,000. The prices are higher than most other places in the country, but it still reflects a big drop.
Around 21% of houses listed recently have seen prices cut, which shows sellers may be desperate.
Another factor in Seattle is that tech companies have been broadly laying off employees, including at Microsoft and Amazon.
St. Augustine, Florida
St. Augustine is beautiful and a favorite among tourists, being known as the oldest city in America. Like the rest of Florida, St. Augustine saw people moving there in droves during the pandemic.
At the peak of the increase in remote work, the prices of homes in St. Augustine rose dramatically.
Now, it’s a different story. Listings are staying on the market longer, and sellers are cutting prices to lure in would-be buyers. More than 28% of listings have price drops, and homes are staying for sale almost double the time they were last year.
Las Vegas, Nevada
Like Phoenix, Las Vegas tends to follow big peaks and valleys in the real estate market. In 2008, Las Vegas was one of the hardest-hit markets in the country. Then, by 2022, the median list price of homes was almost $500,000. It’s come down quite a bit since then, with median home prices around $395,000.
Over 22% of active listings have price cuts, and homes in Las Vegas stay on the market for over two months on average.
Sellers feel a lot of pressure to lower prices or face the worry they’ll be unable to sell their homes.
Huntsville, Alabama
Finally, Huntsville is an aerospace industry hub, leading to a housing boom. There were many new opportunities for people with remote work opportunities and low mortgage rates in 2021, so home prices in Huntsville increased significantly.
Now, more than 20% of recently listed properties have price cuts.
High inflation and mortgage rates are a factor, as is true with the other cities, but home prices are higher compared to a year ago in Huntsville. Price cuts appear to be driven primarily by the need to accommodate the reduction in buying power of the average home shopper.
