Home prices have begun falling in these 10 cities, according to Realtor.com
An influx of smaller single-family homes — paired with falling demand amid higher mortgage rates — has driven home sales and prices down in some markets. (iStock)
While low housing inventory continues to pose a problem for homebuyers, rising mortgage interest rates appear to be dampening demand and leveling out home prices in select regional markets, according to a new report from Realtor.com.
"Many would-be buyers are being priced out of homeownership as higher mortgage rates mean more expensive monthly housing payments," the report reads. "But when there are fewer buyers competing for homes and bidding them up, prices typically go down."
Still, these smaller price decreases "don't portend another crash" like the 2008 housing bubble that spurred the Great Recession. Some of these dips can be attributed to fewer larger homes on the market and an increase in new listings.
To determine where asking prices are trending down the most, Realtor.com analyzed the annual median list price changes in the 100 largest metros in March. Then, they narrowed down their list to just once city per state. Keep reading to find out where today's homebuyers can lock in a good deal, and visit Credible to compare mortgage rates for free without impacting your credit score.
RENT PRICES EXPECTED TO INCREASE IN ALL US MARKETS IN 2022: FREDDIE MAC
Where home listing prices fell the most in March
Realtor.com found that housing prices have begun falling in many smaller Rust Belt cities, as well as some of the largest metro areas in the country. Here are the median listing prices in the top 10 cities in the study, as well as the year-over-year price change:
- Toledo, Ohio: $115,000 (-18.7%)
- Rochester, N.Y.: $149,000 (-17%)
- Detroit: $75,000 (-15.4%)
- Pittsburgh: $230,000 (-13.7%)
- Springfield, Mass: $239,900 (-5.8%)
- Tulsa, Okla.: $220,000 (-5%)
- Los Angeles: $985,000 (-5%)
- Memphis, Tenn.: $173,500 (-4.6%)
- Chicago: $399,000 (-3.7%)
- Richmond, Va.: $310,000 (-3.4%)
Low inventory and rapid home price growth have caused residents of some cities to become priced out of their own real estate markets. George Ratiu, an economist at Realtor.com, said that several of the metros with falling home prices have unemployment rates that are well above the national average.
Buyers in these markets "may face steeper affordability challenges from rising mortgage rates" despite lower prices, Raitu said. The average 30-year mortgage rate surpassed 5% in March for the first time since 2018, which has caused monthly mortgage payments to soar among new borrowers in 2022 so far.
If you're considering buying a home now, it's more important than ever to compare interest rates across multiple mortgage lenders to find the best offer for your financial situation. You can get free mortgage rate quotes on Credible's home loan marketplace.
SMART REAL ESTATE ADVICE FOR FIRST-TIME HOMEBUYERS AND SELLERS
Realtors explain what's happening in their local housing markets
While real estate woes in some Rust Belt markets can be chalked up to higher unemployment and more inventory on the market, that's not the case everywhere.
In Los Angeles, high home values have historically kept many residents stuck in the rental market. And local realtor Rafael Oseguera said that higher interest rates are fueling the affordability fire, with prospective buyers reaching their tipping point as mortgages become more expensive.
"There’s still not that much inventory; there’s still bidding going on," Oseguera said. "It’s just not as aggressive as it was three or four months ago."
Despite the slight cooling in some markets, bidding wars are still discouraging homebuyers in other cities. Competitively priced homes in Pittsburgh continue to get multiple offers, often from out-of-town buyers looking for a good deal.
- Bobby West, a Pittsburgh-based real estate agent
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Lower listing prices don't necessarily signal demise for all regional markets. In Richmond, scarce housing inventory has kept demand high — particularly in the entry-level price point for first-time homebuyers.
To help with marketing (and prevent properties from selling well above appraisal value), listing agents in Viriginia's capitol city have started to under-price homes. That's according to Jenny Maraghy, CEO and founder of a local real estate agency.
"If I know I’m going to get $325,000 for a house, I’m likely going to price it at $299,000 and let it ride the market," Maraghy said. "The biggest mistake we can make is overpricing."
With prices slightly dipping in some U.S. markets, aspiring homeowners may be able to cash in on rising housing affordability. If you're ready to start bidding on homes, you can visit Credible to begin the mortgage preapproval process. Plus, you can browse current mortgage rates in the table below.
ZILLOW FORECASTS LIMITED INVENTORY, HIGH HOME PRICE APPRECIATION THROUGH 2024
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