The 9 US cities where buyers have the best shot at scoring a home because home prices have dropped the most since the spring
Alcynna Lloyd
- A US housing boom has ended as soaring mortgage rates put a damper on buyer demand.
- As homebuyer activity slows, home prices are falling in cities across the country.
Throughout much of the pandemic, rock-bottom mortgage rates, as well government aid meant to stimulate the US economy, spurred on an unprecedented home-buying bonanza.
Enticed by the desire for larger living spaces and the ability live virtually anywhere thanks to the rise of remote work, Americans went on a buying sprees that saw markets large and small pushed to their brinks. Intense competition led to severe bidding wars that drove home prices to record highs, often pushing out those who lacked the considerable cash needed to compete in the red-hot market.
But the US housing boom is over.
The Federal Reserve's aggressive fight against surging inflation has resulted in several interest rate hikes that have pushed mortgage rates to levels not seen in years. As prospective buyers face borrowing costs that have doubled in the past year, activity is becoming increasingly frigid — particularly so in some cities that were homebuying hotspots during the pandemic.
"The market has shifted so rapidly," Orphe Divounguy, a senior economist at Zillow, told Insider. "Most of the price declines will come from the affordability crisis, but also the fact that you had a lot of building activity in those markets — and the demand isn't there anymore."
To get a sense of where home prices are falling the most, we examined home-price data Zillow sent exclusively to Insider. After digging through the numbers for dozens of housing markets, we picked out nine US cities where home prices have rapidly cooled in recent months.
Pandemic hotspots Boise and Phoenix — which have also been referred to as so-called "Zoomtowns," or cities where many people moved during the pandemic — have seen their hot housing markets slowdown drastically. There are also a few areas in California, such as San Francisco and San Jose, that have seen home prices fall more than 5% from their peak values.
The data tell us that home prices are falling the fastest in markets where builders and developers anticipated robust growth only to see demand fade — particularly so in Austin, the nation's frothiest market. Local publication Austin Monitor reports that although the city's builders started roughly 26,500 new homes during the first few months of 2022, as of July, homebuyers had purchased just under 20,000 new homes.
Orphe says miscalculations like this are likely to lead to prices in some areas cooling even further.
"You're not really not going to see a lot of activity in those markets," he said. "I look at Austin, for example, or Phoenix or even Boise —those are markets where inventory has increased a lot, and units are sitting on the market a little bit longer. So what I expect in those markets is that prices will come down."
Read on to see how much prices have fallen in these markets and where else homebuyers are seeing the most discounts.
9. Seattle
When home values peaked: April 30, 2022
Home peak value: $807,930
Current typical home value: $757,177
Percentage change from peak value: -6.3%
8. Phoenix
When home values peaked: May 31, 2022
Home peak value: $481,642
Current typical home value: $449,590
Percentage change from peak value: -6.7%
7. Salt Lake City
When home values peaked: May 31, 2022
Home peak value: $626,219
Current typical home value: $583,074
Percentage change from peak value: -6.9%
6. Las Vegas
When home values peaked: June 30, 2022
Home peak value: $453,981
Current typical home value: $422,503
Percentage change from peak value: -6.9%
5. Boise City
When home values peaked: May 31, 2022
Home peak value: $519,352
Current typical home value: $482,675
Percentage change from peak value: -7.1%
4. San Diego
When home values peaked: April 30, 2022
Home peak value: $943,486
Current typical home value: $876,288
Percentage change from peak value: -7.1%
3. San Jose
When home values peaked: April 30, 2022
Home peak value: $1,695,462
Current typical home value: $1,568,484
Percentage change from peak value: -7.5%
2. San Francisco
When home values peaked: May 31, 2022
Home peak value: $1,491,657
Current typical home value: $1,369,586
Percentage change from peak value: -8.2%
1. Austin
When home values peaked: May 31, 2022
Home peak value: $602,637
Current typical home value: $541,125
Percentage change from peak value: -10.2%
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