Home Prices Fall in Expensive Markets: A Sign of a Slowdown in the Housing Market?
The housing market has been on an upward trend across the country, with home prices increasing by 4% in the fourth quarter from a year ago to a median price of $378,700. However, taking a closer look at individual markets shows a different picture, with some areas experiencing a decline in prices. The National Association of Realtors (NAR) reported that about 11% of the housing markets it tracks experienced home price declines in the fourth quarter of last year.
The most expensive areas of the country have seen a significant drop in prices, with San Jose, California, experiencing a 5.8% decline from a year ago. San Francisco had the biggest price drop in the country last quarter, with the median price falling 6.1% from a year ago. Other expensive cities such as Anaheim, California, Los Angeles, and Boulder, Colorado, have also seen prices fall.
This trend can be attributed to weaker employment in these areas and more residents moving to other parts of the country, as well as the big price increases during the frenzied home-buying market of the past few years.
The good news for buyers looking for price relief is that the 4% median price hike in the fourth quarter is less than the 8.6% increase in the previous quarter. Yun, NAR’s chief economist, believes that a slowdown in home prices is underway and welcomed, particularly as home prices have risen 42% in the past three years, far surpassing wage increases and consumer price inflation since 2019.
In conclusion, while the housing market has been strong in many areas of the country, some expensive markets are experiencing a slowdown. This trend may be a sign of a broader slowdown in the housing market. However, it’s also an opportunity for homebuyers to find more affordable homes in these areas. With fewer markets experiencing double-digit price gains, the housing market may be becoming more favorable for buyers looking to purchase a home.