Where Are Home Prices Falling The Most in 2023?
My name is Greyson Roberts, a Realtor in the greater Springfield, Missouri area. I will hopefully answer your deepest, darkest real estate market questions in today’s blog.
Looking to relocate or just hoping your local market is about to bring you a juicy deal? Here’s the top 10 cities where home prices are falling the fastest. Let’s just right into what you’re here for, then we’ll discuss why these markets are dropping the fastest, the future of the national real estate market and what you should do to prepare.
Top 10 markets seeing cuts in asking prices:
- Boise, Idaho: 61.5%
- Denver, Colorado: 55.1%
- Salt Lake City, Utah: 51.6%
- Tacoma, Washington: 49.5%
- Grand Rapids, Michigan: 49.3%
- Sacramento, California: 48.7%
- Seattle, Washington: 46.3%
- Portland, Oregon: 45.7%
- Tampa, Florida: 44.5%
- Indianapolis, Indiana: 44.1%
You got what you came for, now let my family go. Now it’s very important for you to understand WHY this is so you can see these trends coming in your local market to set yourself up for a steal. But first, are you interested in some free money?
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The Explanation
First things first, these markets saw the most price increases during the pandemic. These insane price hikes were clearly not sustainable. So, home prices in areas like this aren’t “crashing” or becoming a bargain, they’re simply coming back down to reality, where they probably should have been in the first place. Not as exciting, I know, but it’s very important that you understand this. A price reduction doesn’t mean a good deal!
Now, with that being said, there are many areas that behaved very similarly as the ones previously mentioned. You may be sitting in an area right now, thinking you’re seeing the same pattern! For example, lake houses in my area on Table Rock Lake skyrocketed and now we’re seeing some major price reductions. However, I’ve looked at a few homes, ran comps, looked at the market and the whole 9 yards. Listen, I am living through a similar market and even though everyone’s dropping, it doesn’t make it a good deal! Don’t fall for this, as many investors are going to be disappointed when in 5 years they realize they didn’t actually get as much of a discount as they thought they did.
Does this mean you shouldn’t buy right now? No, you can buy it if you want, but it’s complicated. Everyone’s needs are different. I have buyers right now NEEDING to purchase property, I have investors who have decided to wait. If the market doesn’t “crash” which it wont, then no harm no foul, they just lost out on time. If it does, more power to them. Here’s a secret that nobody tells you in real estate, if the numbers work, they work! There are deals and money to be made in EVERY market.
Supply and Demand
Now, another big fat contributor is more homes being on the market. The supply and demand is still out of whack and it’s still one of the hottest sellers markets we’ve ever seen. However, why are there more homes for sale? New home construction permits aren’t spiking upward, so how is there more inventory? Two words. Mortgage demand.
Interest Rates
Interest rates have tripled since the pandemic when this all started. New mortgages being issued are much, much lower compared to the past few years. Significantly lower. People are worried about a recession, buyers think the market is going to crash (it’s not) and borrowing money is much more expensive.
If you qualified for a $500k loan in 2020, you can only afford around $300k now. Every 1% rate increase leads to a 10% decline in your purchasing power. This is a major contributor and is being done so by design, on purpose by the federal reserve to curb inflation. It’s working, ish. Moral of the story, just because you’re seeing lots of rapid price cuts in your area, don’t thank your lucky stars just yet. Slow down and run the numbers as you always would. Do not rush a deal unless it’s a confirmed home run. There ya have it. Buy a house (from me).
