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Grace Cary/Getty Images October 19, 2022 Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Bankrate logo The Bankrate promise
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Metro areas with sharpest price drops
These 10 metropolitan areas experienced the largest retreat in values in the three months ending in August 2022, according to CoreLogic’s home price index: San Jose, CA: -9.4% Seattle, WA: -8.2% Oakland, CA: -7.6% Coeur d’Alene, ID: -7.3% San Rafael, CA: -6.2% San Francisco, CA: -5.4% Idaho Falls, ID: -4.9% Boulder, CO: -4.5% Logan, UT: -4.4% Boise, ID: -4.3% The list is dominated by West Coast tech hubs, and by the Mountain West metro areas that saw home prices soar in recent years as new arrivals from Northern California and Seattle moved in and bid up home values. CoreLogic’s index doesn’t report price declines in dollar amounts, but Silicon Valley is among . The median sale price for existing single-family homes in August was $1.65 million, according to the . Recent buyers in those markets are feeling the pain. But CoreLogic economist Selma Hepp notes that home values in all of those markets remain above their year-ago levels.
How severe will this price correction be
Housing analysts generally agree that the market is due for a correction, and that the spike in mortgage rates during 2022 has hastened the downturn. However, almost that would rival the plunge in home prices that characterized the Great Recession. Most homeowners today have plenty of , and many Americans locked in low fixed rates on their mortgages. Therefore, a repeat of the crisis of the early 2010s appears unlikely. Hepp doesn’t see any signs of another housing crash, which forced many homeowners out of their over-leveraged homes. Today’s owners will simply stay put, she says: “Because they don’t have to sell, they’re just going to say, ‘I’m going to wait it out.’” , CFA, Bankrate’s chief financial analyst, likewise sees a slowdown rather than a collapse in home values. “By and large, we’re unlikely to see a sharp drop in home prices,” McBride says. “While some ZIP codes may see this, those will be the exception rather than the rule. More broadly, a plateau in home prices in the most supply-constrained markets is most likely. There will be some softening of home prices. You won’t get the price you would have in April, but it’ll still be higher than if you’d sold a year ago.” All real estate is local, as the old saw goes, and the scale of price corrections will depend very much on local factors, says Ken H. Johnson, a housing economist at Florida Atlantic University. “Housing markets with population expansion, inventory shortages and low price-to-rent ratios will, on average, fare better than markets characterized by stagnant population growth, fewer inventory problems and high price-to-rent ratios,” Johnson says.
Home prices still rising in many markets
While West Coast metro areas are seeing a pullback, home values continue to rise in other regions. “Average prices are still rising in Florida and much of the rest of the country,” Johnson says. According to CoreLogic’s data, these 10 metro areas had the fastest price growth during the three months ending in August 2022: Youngstown, OH: +9.3% Michigan City-La Porte, IN: +8.9% Kokomo, IN: +8.3% Fond du Lac, WI: +8.2% Homosassa Springs, FL: +7.5% Glens Falls, NY: +7.1% Utica, NY: +6.9% Danville, IL: +6.5% Miami, FL: +6.4% Longview, TX: +6.3% SHARE: Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles