(NEXSTAR) — Several U.S. cities where home prices skyrocketed due to an influx of new residents during the pandemic are now seeing prices drop quickly. Real estate experts at Redfin looked at year-over-year data back in February and then again in October to find where the price per square foot dropped the most during that time period.
These are the U.S. metros where price growth is decelerating fastest, Redfin says:
|U.S. metro||YoY change in Feb. 22||YoY change in Oct. 22||Drop in YoY price February-October|
|Austin, Texas||24.2%||1.3%||-23 ppts|
|Phoenix, Arizona||28.7%||6.0%||-23 ppts|
|San Jose, Calif.||20.4%||-1.6%||-22 ppts|
|Las Vegas, Nevada||29.3%||8.0%||-21 ppts|
|Boise, Idaho||20.1%||0.0%||-20 ppts|
|Oakland, Calif.||19.3%||-0.6%||-20 ppts|
|Sacramento, Calif.||20.8%||1.2%||-20 ppts|
|Riverside, Calif.||25.6%||6.8%||-19 ppts|
|Colorado Springs, Colorado||22.5%||3.8%||-19 ppts|
|Seattle, Washington||22.2%||3.6%||-19 ppts|
As Redfin explains, these U.S. metros saw huge population growths as remote work became more common as a result of the pandemic. For the first time, perhaps ever, many American workers had the option to work virtually from less expensive cities than where their employers were located.
And although many corporations have begun pulling workers back into the office, Pew Research data from February showed about six in 10 U.S. workers who could work remotely were, at least most of the time.
But housing data indicates that a variety of factors are slowing things down. “The forces slowing the housing market, such as high mortgage rates, are having an outsized impact on places like Austin and Boise that saw home prices skyrocket over the last few years,” said Redfin Senior Economist Sheharyar Bokhari. “Home prices can only rise by double digits for so long before the growth becomes unsustainable. High rates and stumbling tech stocks are making it unsustainable quite quickly, especially in destinations popular with tech workers. Plus, many of the out-of-towners with big budgets who wanted to move into those places already have.”
In Texas’ capitol city, where many major corporations relocated during the pandemic (including Tesla and Oracle), an overabundance of homes is becoming a big part of the problem. “Inventory was about 1,500 [homes] at the beginning of the year,” Lisa Muñoz, a realtor with The Muñoz Group at Realty Austin told KXAN News. “We have almost 10,000 houses on the market right now, so more inventory means a big softening in prices.”
Muñoz said right now, at least in Austin, higher interest rates and supply of vacant homes makes the local market more suitable for buyers. “It’s rare to see a multiple offer situation right now,” she said. “In fact, buyers are able to negotiate sometimes on the front end. Sellers are paying some closing costs. They’re buying interest rates down. This is a really great time to get into the real estate market.”
KXAN News’ Will DuPree contributed to this report.