Per Realtor.com "Buyer Bargains: Here Are the 10 U.S. Cities Where Home Prices Are Dropping the Most Right Now" (Hint #1 is Austin, Texas)

 

Buyer Bargains: Here Are the 10 U.S. Cities Where Home Prices Are Dropping the Most Right Now

By Evan Wyloge

Oct 10, 2022. click here for the direct realtor.com link article



The inconceivable is happening. After two-plus years of unimaginable and seemingly inexorable growth, home prices are falling from their heady peaks over the summer.

The reason: Higher mortgage interest rates have thinned out the ranks of buyers who can still qualify for a home loan and sharply reduced the price of the homes the remaining few in the market can afford. Gone are most of the frenzied bidding wars and six-figure offers over the asking prices. Homes are now sitting on the market longer, inventory is piling up, and sellers—at least in some markets—are cutting prices.

In some metropolitan areas, median list prices overall are falling from their June highs. These are the places where buyers can find relative deals compared with a few months earlier and where there are generally more homes for sale. The Realtor.com® data team rounded up these buyer-friendly housing markets.


Ironically enough, they tend to be the areas that fully dominated the real estate market during the COVID-19 pandemic, with big influxes of new residents from more expensive parts of the country looking for more affordable homes and investors competing with them. Some of the steepest decreases are in Sun Belt destinations.




These changes can be chalked up to more than just the price deceleration of this time of year, says Realtor.com Chief Economist Danielle Hale.

Prices generally “cool off as we move from the heat of the summer into the fall,” Hale says. “But this reflects more than seasonal cooling in prices.”

While the price declines are great for buyers, they’re causing sellers in these markets to sweat, as many begin to drop their asking price. But, nationally, prices are still up 14% since this time last year, even if they’ve dropped since early summer. And although home prices are down in these metros, when compared with the June peak, they’re all still up year over year.

“Home shoppers in these areas are probably excited to see these prices come down,” Hale says. “But to put it into context, it’s still above where it was last year.”

To figure out where home prices dropped the most, Realtor.com looked at the monthly median home list prices in the 100 largest metropolitan areas. Then we calculated the price change since June, when markets peaked nationally. Finally, we included only the metro with the biggest drop in any state, to ensure geographic diversity.

(Metros included the main city and surrounding towns, suburbs, and smaller urban areas.)

Ready? Let’s see if we can find you a bargain.

1. Austin, TX

Median home list price in September: $558,275
Change since June: -10.3%
Change since September 2021: +2.2%

Austin became the poster child for torrid housing market growth during the pandemic. Prices, sales, and incoming residents all skyrocketed. The city has become a tech hub in recent years, and the overall relative affordability of Texas has drawn newcomers from both coasts.

But, as the saying goes, what goes up must come down. After historic low inventories, more homes are now for sale. Prices dropped more than 10% in just the past three months, almost wiping out the gains seen over the past year. Austin is still up 2.2% year over year, but that’s the lowest remaining gain on the list.

The percentage of sellers in the metro area who slashed their list prices was up 252% in September compared with the previous year.

Paul Reddam, an Austin real estate agent with Homesville Realty Group at Compass, says sellers are feeling the effects of the greater inventory and lessening demand.

“Sellers are thinking, ‘Gee, this is painful,’” Reddam says. “We’re kind of seeing what we saw in 2001, when the dot-com bubble burst. We had a lot of people leaving at that time, and people didn’t want to sell because they were underwater.”

Reddam doesn’t think it’s all doom and gloom for the Austin housing market, though. He expects that, when prices hit new lows, investors and other cash buyers will step in.

“Big money is looking for the bottom,” he says. “They’ll start gobbling things up at a deal.”