Home Prices Aren’t Soaring Everywhere: These Are the 10 Metros Where They’re Falling the Most
It’s no secret that we’re in one heck of a sizzling housing market, with prices reaching new heights in many parts of the country. It’s a go-go seller’s paradise of historic proportions, with hordes of stressed home buyers duking it out to find affordable—and available—places they can call their own. It may seem like nothing can slow down those runaway prices for everything from high-rise condos in the biggest cities to cookie-cutter, single-family homes in the suburbs.
But here’s the news: There are exceptions to every rule.
There are actually a few metropolitan areas in the U.S. where prices are coming down. And the data team at realtor.com® found them. (Only 27 of the nation’s 350 largest metros saw price drops.)
In each case, there was a particular reason for the decline, including overbuilding in a boom market; mass layoffs or company closings amid oil-related economic downturns; and a spate of natural disasters.
“We are in a full-fledged housing boom, and home prices are skyrocketing. At a national level it is blue skies with no real big clouds on the horizon,” says Daren Blomquist, a senior vice president at the real estate information firm ATTOM Data Solutions. “But an act of God can stall a region’s housing market, something you can’t predict well: mudslides, wildfires, hurricanes. … Weakness in the regional or local economy can ripple out into the housing market as well.
“Given the fundamentals of the housing business, the silver lining here is this is an opportunity for buyers who have been locked out, an opportunity to get the foot in the door,” Blomquist says.
To figure out where prices are coming down, we compared two years of median list prices in the 350 largest metropolitan areas from realtor.com listings data. We compared the 12-month periods of May 2016 to April 2017 with May 2017 to April 2018 to come up with our findings. Then we ranked metros that saw the biggest price cuts.
Now let’s take a look at the metros where buyers can still get a home for a discount. Maybe even a deep discount!
Median home list price: $951,600 Price drop*: -17.7%
The tony swath of California coast, almost two hours north of Los Angeles, got hit with a double whammy of natural disasters over the past year. First, wildfires swept through in July, burning almost 50,000 acres and destroying nearly 20 homes. Then in January, a series of mudslides hit Montecito, CA, an ultrapricey market in the county with lots of luxurious mansions owned by celebrities such as Oprah Winfrey.
The mudslides killed more than 20 people and toppled many homes. The state projects they caused more than $400 million in damages. As of last month, more than 1,400 insurance claims for homes had been received.
The disasters kept both buyers and sellers from making any sudden moves as they waited to see what would unfold, says local real estate broker Terence Alemann,of Alemann and Associates. And those stalled sales in places such as Montecito, where the median home list price is a whopping $3 million, have helped to drag down overall prices.
All of that devastation and uncertainty took a toll on the market. Damaged properties, or homes in close proximity to them, are being marked down substantially compared with those in pristine condition and areas. And some buyers have been more hesitant to jump into the market.
“People who might have considered buying there are going to think twice,” says Blomquist. “People think it could happen again.”
The Great Recession hit the manufacturing sector of Pottsville, home to the Yuengling brewery (America’s oldest!), hard. And while the economy is improving with large distribution centers opening up in the region, that recovery has been decidedly uneven.
The unemployment rate hit 5.7% in March, well above the national average of 4.1%. That’s left fewer folks with the means to become homeowners.
“Homes between $50,000 to $125,000 aren’t selling as fast” as they were last year, says Erica Ramus, owner and broker at Ramus Realty Group. The lack of inventory is also working against homeowners potentially interested in trading up.
Most of the single-family residences that are available are mostly older Victorians, built in the early 1900s through the 1950s. But most local buyers are more interested in new construction, Ramus says.
“There just is not enough to choose from,” she adds.
Median home list price: $823,900 Price drop: -6.7%
The vast 2017 wildfires that tore through Napa and other swaths of California’s lush wine country were the most deadly and destructive on record: 44 people were killed and over 8,000 homes and other buildings were destroyed across the region. A big part of that damage centered on beautiful Napa, so it’s no surprise that the housing market there has stumbled a bit while other parts of the state continue to soar.
“In the immediate aftermath [of the blazes], the market slowed down,” says Kristofer Chun, an associate broker at Kristofer Chun Real Estate, in Napa. The fires spooked insurers, making it harder to get mortgage insurance in the region, and made many would-be buyers a little skittish, he says.
The hardest-hit part of Napa was its northeast areas, including single-family, suburban homes near the renowned Silverado Country Club that were burnt to the foundations. Most of these homes were on the luxury side of the market and were priced between $1.5 million to $2.5 million.
“We are slowly seeing some of these burnt-out lots come on the market priced around $500,000,” Chun says. That’s a fraction of what they were valued at before the blazes, when there were homes still standing on them. But new regulations and codes based in the wake of the fires might make these lots unbuildable, he adds. This could depress prices even further, at least for a time.
Median home list price: $373,000 Price drop: -4.3%
For years, fun ‘n’ funky Austin has been experiencing a prolonged growth spurt. Folks move to the state capital of Texas, known for its live music scene, innovative food trucks, and burgeoning tech sector, from all across the U.S. (Its population shot up from 1.2 million in 2000 to 2.1 million in 2017.)
Builders responded in kind by putting up sleek, new apartment and condo buildings downtown and creating new subdivisions and communities of more suburban, single-family homes on the outskirts of the city and beyond. But they may have gone a bit overboard. The result has been something rare these days: a surplus of housing. After years of surging home prices, they’re finally beginning to head south as a result of that overbuilding.
Not only have prices dropped, but foreclosures are up, too. That’s a sign of an overheated market: If prices get too high, buyers might overextend themselves in an attempt to get their foot in the door. In the first three months of this year foreclosures in Austin increased 30% compared with the same period last year, according to ATTOM. Those increased foreclosures came from borrowers who bought homes a few years back when prices were lower—so recent borrowers who took out even higher debt loads might be headed for trouble.
“The Austin market has performed very well for the last few years, but it is not immune to some distress creeping in,” ATTOM’s Blomquist says. The surge in foreclosures means “some folks [are] getting into homes they couldn’t afford.”
Long before the rest of the housing market fully recovered from the last recession, Austin was growing at a rapid pace. If prices keep falling here, the rest of country might want to hope the city isn’t a bellwether this time around, too.
Median home list price: $134,000 Price drop: -4.2%
Coal is a big part of Beckley’s past and present, so much so that the region even has an attraction called the Beckley Exhibition Coal Mine and Youth Museum. But lately it hasn’t been easy having its fortunes tied so closely to this industry, which since the start of 2012 has shed 42% of its jobs nationwide.
“You don’t have the same number of [coal] employees as they’ve had in the past. They do a lot of it by machinery [now],” says Ellen Taylor, president of the Beckley-Raleigh County Chamber of Commerce.
But there are already signs that things are looking upward.
“We see businesses opening up, and we do a lot of ribbon cuttings these days,” Taylor says.
Median home list price: $301,700 Price drop: -3.6%
College Station, about an hour and a half north of Houston and nearly three hours south of Dallas, is best known as the home of Texas A&M University and more than 68,000 students. But these Aggie football fans got a little carried away on their latest housing boom, putting up too many new residences. As a result there are more homes for sale than buyers to scoop them up. Hence, the discounts.
“To be blunt, the housing market is crashing right now,” says Jeff Leatherwood, a broker at Aggieland Properties. “Properties built for the purposes of student housing are just overbuilt. We are a huge college town, and most of our market is rental properties.”
This overabundance of housing, particularly homes aimed at students, could get worse before it gets better, local professionals fear. The verdict will become clear once the school year starts up again.
“There is an air of doom and gloom,” Leatherwood says. “When the school year starts again in September, homes [that didn’t get student renters] will flood the market.”
Median home list price: $237,600 Price drop: -3.1%
Before making landfall in Houston last August, Hurricane Harvey tore through Corpus Christi. The storm brought winds exceeding 130 mph to the city, leveling homes all over the region and causing billions in damages.
In some Corpus Christi communities such as Rockport and Aransas Pass, an estimated 80% of homes were damaged, according to the South Texas Economic Development Center. Many of the seaside, two-story, vacation homes in the city of Rockport were ripped to pieces.
All that damage has taken much of the steam out of the local housing market. Some owners of damaged homes have since foreclosed and put their properties on the market. And other would-be buyers are sitting on the fence because they’re worried about buying in areas that could flood again.
And it’s not just homes that were damaged: The hurricane slowed down business for the local port and gas companies, the primary economic engines for the region.
Median home list price: $299,000 Price drop: -3.0%
The impact of the oil industry is easily apparent on a quick stroll through downtown Anchorage. This is a city where two of the most prominent high-rises are emblazoned with the BP and ConocoPhillips logos. In fact, the ConocoPhillips Building, at 22 stories, is the tallest building in the state.
Those close bonds with the oil business have proven to be a double-edged sword—the region (and entire state) was walloped when oil prices started to drop in 2015. Production fell, jobs were slashed, and government budgets were strained. It didn’t take long for the impact to be felt on the housing market as many workers were forced to move to other parts of the country to find work.
But there are signs that the region’s oil industry—along with its housing market—could be coming back. Last year Oil Search, a Papua New Guinea oil company, acquired a $400 million stake in an oil field in Alaska. It’s since hired workers in Anchorage.
Median home list price: $176,900 Price drop: -2.7%
Like Anchorage, as oil prices took a hit, so did Houma. The city, about an hour southwest of New Orleans, is known for its petroleum industry as much as its gumbo.
“Over the last two years, due to the decline in oil prices, our market has suffered reduced home prices and had fewer buyers,” says Michelle Parsons, an associate broker at Town and Country Real Estate, in Houma. Companies have closed shop, relocated operations, and laid off workers. “We’ve simply had more homes available than there are buyers.”
Last year, buyers negotiated down list prices by as much as 8% as sellers were desperate for offers. But this year, they’re getting only a few percentage points off, she says.
The few buyers in the Houma area are typically looking for three-bedroom, two-bathroom homes in good school districts in the suburbs, she says. And she’s hopeful the region’s fortunes will soon turn around.
“There are no big hiring sprees yet,” but companies are starting to hire again, Parsons says. “We’re seeing the very, very beginnings of improvement.”
Median home list price: $263,200 Price drop: -1.8%
During the mid-2000s advances in hydraulic fracturing and the discovery of oil set off a big boom that kept employment strong and home values up in Bismarck. But when oil prices experienced a big decline, so did the oil and natural gas jobs in the Bismarck region. Is this sounding familiar by now?
A barrel of crude oil was above $100 in 2014. By early 2016, the price was under $30. (It’s since rebounded a bit, topping $60.) This was a serious blow for Bismarck. Despite being one of the country’s least populated states, North Dakota was second, behind Texas, for crude oil production in 2016, according to Statista.com.
When oil prices were high, the housing market was cutthroat in Bismarck. All types of homes were flying off the shelves: single-family homes, condos in town, and McMansions in the suburbs. You name it, it was seeing higher prices.
“The demand was so stiff, people were living just about everywhere,” says Kevin Iverson, census office manager at the North Dakota Department of Commerce, in Bismarck. “I heard of people paying $1,000 to park their camper in a [homeowners] backyard.”
When the oil industry hit hard times, that housing demand disappeared. Prices went down, and homes didn’t fly off the market as quick.
“When oil prices go down, you hurt,” says Iverson. “When it goes up, you do well.”