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13 places in the US where it's probably not worth investing in real estate for the next decade
13 places in the US where it's probably not worth investing in real estate for the next decade
Liz KnuevenNov 20, 2019, 03:43 IST
Elaine Thompson/AP
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Hot real estate markets aren't forever.
With changes in the way people work, live, and spend, some US markets that were once hot are cooling off.
Markets seeing quick declines include neighborhoods in Silicon Valley, San Francisco, and Seattle, along with neighborhoods in Miami Beach, Florida and Chicago, Illinois.
These changes probably mean you'll want to look elsewhere to invest in real estate in the near future, but markets are cyclical, and home values are changing all the time.
Many people argue that buying a home is an investment. However, it doesn't always work out like that.
Consumer trends expert Beatrice de Jong of Opendoor says many factors influence the rise or fall of a neighborhood's value, including job availability, school districts, and affordability.
Data from Zillow shows which US housing markets are currently cooling the fastest, but there's no need to panic if you've been eyeing these locales. "The real estate market is always cyclical," de Jong says. "It's hyper-local, but it's also cyclical."
Here are the 13 US real estate markets losing value the quickest, along with their projected decrease in value over the next year and each area's median home price as calculated by Zillow.
13. Greater San Antonio, Mountain View, California
Home to many large tech companies, this neighborhood of Mountain View, California is seeing prices decline.
De Jong says these west coast markets are cooling after the height of the tech boom. "Seattle, Palo Alto, and Mountain View are big tech hubs," she says. "Most of those cities have a lot of new jobs, high-paying jobs, bringing people up to the area. That really created a spike in the real estate prices."
Current median home value: $1,224,900
Year-over-year forecasted value drop: 5.83%
12. East Village, New York City, New York
New York City's real estate market is one that de Jong says can be vary widely even by the block and change quickly.
"New York is so hyper-local, even just to the neighborhood in Manhattan," she says. Real estate is even affected by something like a subway line being under construction, because that affects people's daily commutes."
In places like East Village, it's a buyers' market right now, though many people might be looking elsewhere.
Current median home value: $1,247,400
Year-over-year forecasted value drop: 5.83%
11. Explorers, Foster City, California
This Foster City neighborhood is seeing home values fall, despite its proximity to lots of high-paying jobs in Silicon Valley.
Current median home value: $1,258,500
Year-over-year forecasted value drop: 5.9%
10. Crescent Park, Palo Alto, California
The median home value in this Palo Alto neighborhood is over $4 million. But, just because a home in this neighborhood is worth $4 million today doesn't that doesn't mean that it will be tomorrow.
Current median home value: $4,456,300
Year-over-year forecasted value drop: 5.9%
9. Irving Park, Chicago, Illinois
Northwest of Chicago, this suburb has a lot of history and charming older homes. But, according to Zillow data, values in this neighborhood have fallen over 8% in the past year, and are expected to drop another 6% in the next year.
Current median home value: $358,000
Year-over-year forecasted value drop: 6.05%
8. Financial District, New York City, New York
This busy commercial district in New York City is seeing home values fall. Homes here have fallen about 11% in the past year, and are predicted to drop another 6% over the next year.
An increase in remote work has made it less necessary for people to stay in these urban markets. "With so many people working remotely, it opens up options for living outside of the major cities," says de Jong. "People can have that lifestyle where you can have a house with a bigger yard or more bedrooms in the suburbs or on the outskirts."
Current median home value: $939,500
Year-over-year forecasted value drop: 6.11%
7. Burleith, Washington DC
This DC suburb just north of Georgetown has been seeing falling home prices, even though it has a pretty expensive housing market.
Current median home value: $1,023,400
Year-over-year forecasted value drop: 6.21%
6. Old Irving Park, Chicago, Illinois
Just west of nearby Irving Park, Chicago, this neighborhood is a perfect example of just how cyclical markets can be. In March 2012, Zillow data showed the median home value at $194,000, quickly increasing to $332,000 by May 2018. Ever since, home values have been dropping here again.
Current median home value: $290,700
Year-over-year forecasted value drop: 6.28%
5. Charleston Meadow, Palo Alto, California
Another Palo Alto town on this list, Charleston Meadow faces challenges with home values, though the median value is well over $2 million.
Current median home value: $2,245,300
Year-over-year forecasted value drop: 6.47%
4. Oceanfront, Miami Beach, Florida
Miami Beach sits on a narrow strip of land surrounded by water, west of the city of Miami. With waterfront property on both sides, much of Miami Beach will be very vulnerable to sea level rise. According to a report by the Union of Concerned Scientists, about 12,000 homes in Miami Beach are currently threatened by sea level rise over the next 30 years.
Current median home value: $406,200
Year-over-year forecasted value drop: 6.64%
3. La Gorce, Miami Beach, Florida
Another Miami Beach neighborhood, La Gorce, is seeing some big drops in its high-dollar homes. This neighborhood is an island, and rising waters will continue to threaten this community over the next 10 years.
Current median home value: $1,870,700
Year-over-year forecasted value drop: 6.66%
2. Noe Valley, San Francisco, California
San Francisco has a unique real estate climate where markets can heat and cool quickly, and Noe Valley is a neighborhood seeing this firsthand.
De Jong says San Francisco is always changing. "People have been speculating that it's either going to jump up rapidly again and keep on the same incline," she says. "Or, they fear that it's a bubble, that prices are going to drop, that companies will move out of San Francisco. I haven't actually seen any of that yet."
"For the most part," she continues, "people will hold on to their real estate and it will continue to increase over time. It might just not be as great as it has been in the past couple of years."
Current median home value: $1,839,300
Year-over-year forecasted value drop: 6.7%
1. North College Park, Seattle, Washington
Homes in this neighborhood in northern Seattle are losing value at the quickest rates in the nation, and are predicted to lose about 7% in value in the next year.
In Seattle overall, the market has cooled a bit, and this neighborhood just north of the city proper reflects that. Zillow data shows that the median value in this city is down from June 2018's high of $750,000 to $700,000 in September 2019.
As The Seattle Times' Paul Roberts reports, it's a highly local trend. "The Puget Sound housing market continues to splinter into hot and cold sectors — with substantially more heat the farther south you move," he writes.
As a tech city, Seattle is subject to some of the same cooling trends that Silicon Valley is experiencing, and this neighborhood is no different.
