Homebuyers finally are getting some relief from sky-high housing costs, according to the latest market report from real estate marketplace Zillow.
Nationwide, the typical home value slipped 0.2% in October to $357,733 and is now down 0.5% from its peak in June.
In addition, mortgage rates have come down from their highs, making a home purchase more affordable for millions.
In a summary of the findings, Zillow chief economist Jeff Tucker says:
“The housing market entered a deep freeze this November as buyers paused their purchasing plans, likely till after New Year’s in many cases. The two big questions are whether mortgage rates will continue to decline, and whether that will be enough to bring buyers back in time for the spring selling season.”
Prices still remain elevated after the runup of the past couple of years. But in some key markets, the slide in home values is approaching 10% — or even more.
Following are the markets where home prices have fallen most significantly from their peak earlier this year.
San Diego
Change in this metro area’s raw Zillow Home Value Index from its peak: 7% decline
California has more cities on this list than any other state. Recently, the San Diego Union-Tribune reported that almost half of homes for sale in San Diego County had a price reduction.
Los Angeles
Change in this metro area’s raw Zillow Home Value Index from its peak: 7.2% decline
Like its neighbor to the south, Los Angeles also has seen prices fall relatively quickly during the summer and fall.
Recently, Realtor.com forecast home sales in the city to plummet by 15.8% in 2023. At the same time, prices are actually expected to rise by 3.2%.
Raleigh, North Carolina
Change in this metro area’s raw Zillow Home Value Index from its peak: 7.2% decline
While prices in Raleigh are sinking, that trend could reverse soon.
Lawrence Yun, the chief economist and senior vice president of research at the National Association of Realtors, projects that Raleigh and Atlanta will outperform other housing markets during 2023.
Salt Lake City
Change in this metro area’s raw Zillow Home Value Index from its peak: 7.9% decline
In September, we reported that Salt Lake City was among the “10 Housing Markets With the Most Sellers Dropping Prices.”
Like many cities in the U.S. West, Salt Lake City saw an enormous boom in demand for housing during the pandemic. But now, values in those cities are coming back down to earth fast.
Las Vegas
Change in this metro area’s raw Zillow Home Value Index from its peak: 8% decline
Although mortgage rates have been falling, it hasn’t resulted in buyers flooding back into the Las Vegas housing market.
Sam Khater, chief economist with mortgage buyer Freddie Mac, recently told the Las Vegas Review-Journal that homebuyer sentiment “remains low, with no major positive reaction in purchase demand.”
Phoenix
Change in this metro area’s raw Zillow Home Value Index from its peak: 8.1% decline
Will the Phoenix housing market crash again?
Forbes recently asked that question, raising the specter that Phoenix could see a housing downturn on the scale of the crash that occurred during the Great Recession.
The publication concludes that if the U.S. economy goes into recession next year, Phoenix housing could plunge with it. However, any downturn is unlikely to match the epic collapse that swept across the desert 15 years ago.
San Francisco
Change in this metro area’s raw Zillow Home Value Index from its peak: 9.5% decline
Market dynamics have changed in San Francisco. As we noted recently, people are exiting the city at a higher rate than residents in any other major metro.
Patrick Carlisle, chief market analyst for Compass, recently offered this advice to Bay Area buyers:
“Pay less attention to, or even ignore, what sellers are asking for and make offers at the price you want to pay. Some beautiful homes, luxury and ultra-luxury houses and condos, are selling at large discounts off asking prices. A buyer who can close the deal currently holds the balance of power.”
Austin, Texas
Change in this metro area’s raw Zillow Home Value Index from its peak: 10.4% decline
For the first time in four years, housing prices flattened out in Austin year-over-year during November, according to a recent report from the Austin Board of Realtors.
The Texas city was one of the nation’s most popular places for people relocating during the pandemic. But things appear to be getting back to a sense of normalcy now.
San Jose, California
Change in this metro area’s raw Zillow Home Value Index from its peak: 10.6% decline
Like Zillow, Black Rock also says prices are falling hard in San Jose. In fact, it says the city is No. 1 on the list of “3 Markets Where Home Prices Have Dropped by More Than 10%.”
While prices may be down for now, Shishir Mathur, professor of urban and regional planning at San Jose State University, believes they will not stay that way, thanks to long-term trends that suggest a constrained housing supply in the region.
As Mathur told the San Francisco Standard:
“My hypothesis is, at least in the Bay Area, the housing prices are going to come back very quickly.”