Introduction to the Shift in Home Values
After years of record-breaking appreciation, the market is starting to come back down to earth in some areas where houses are beginning to lose value. While sellers may not welcome the shift, it could finally bring some financial relief to would-be homebuyers who’ve found affordability out of reach in recent years.
The Assessment by Realtor.com Economists
Realtor.com® economists assessed the country’s 100 largest metros to find the 10 experiencing the greatest year-over-year median home value losses. North Port–Bradenton–Sarasota, FL came in first, with Florida accounting for 6 of the top 10 metro areas.
Florida’s Market Cooling
“Florida has seen significant market cooling and strong inventory growth, which has driven prices down as the supply of homes for sale outpaces demand,” says Joel Berner, senior economist at Realtor.com. The ancillary costs of homeownership in Florida—like insurance, maintenance, and HOA fees—are also high and growing, which keeps buyers sidelined.
Cities Experiencing Significant Drops in Home Values
North Port–Bradenton–Sarasota, FL
The median listing price in this area is $478,800, with a median year-over-year value change of -8.6%, or -$36,423. Parts of Sarasota saw home prices shoot way up during the [COVID-19] pandemic, according to real estate agent and investor Ron Myers, of Ron Buys Florida Homes. “People were moving fast, bidding high, and many bought sight unseen just to lock something down. Those prices weren’t really sustainable long-term. Now that interest rates are up and monthly payments are higher, demand has slowed.”
Fort Myers, FL
The median listing price here is $399,900, with a median year-over-year value change of -7.9%, or -$29,393. Many people who moved to Florida during the pandemic had to go back to the office and move out of Florida, at a time where rates have gone up and stayed up, says Katrina Allison, real estate broker and owner of Absolute Equity Realty Group in Fort Myers.
Austin, TX
Austin was a pandemic-era boomtown that saw prices shoot up in 2021 and 2022 that are now coming back down, with a median listing price of $479,000 and a median year-over-year value change of -6.1%, or -$26,970. New construction is part of the story, as builders responded to the spike in demand by building lots of new homes in this metro, and now that existing-home inventory has rebounded as well, supply exceeds demand.
Other Affected Cities
- Cape Coral, FL: Median listing price $339,900, median year-over-year value change -4.4%, or -$13,614.
- Denver, CO: Median listing price $586,900, median year-over-year value change -4.4%, or -$22,164.
- San Jose, CA: Median listing price $1,199,000, median year-over-year value change -4.4%, or -$44,672 (not listed but mentioned for context).
- Tampa, FL: Median listing price $384,000, median year-over-year value change -4.4%, or -$14,351.
- Orlando, FL: Median listing price $400,000, median year-over-year value change -4.2%, or -$14,707.
- Jacksonville, FL: Median listing price $389,000, median year-over-year value change -3.3%, or -$11,376.
- Denver, CO (condos and townhomes): Median listing price $579,000, median year-over-year value change -3.3%, or -$18,261.
- San Francisco, CA: Median listing price $915,000, median year-over-year value change -3.1%, or -$30,336.
Conclusion
The shift in home values, particularly the drops seen in cities like those in Florida, Colorado, and Texas, signals a market correction after years of rapid growth. This change could bring relief to potential buyers but also reflects the challenges sellers face in a market where supply exceeds demand and where the costs associated with homeownership are rising.
FAQs
- Q: Which states are most affected by the drop in home values?
A: Florida is the most affected, with 6 of its metro areas among the top 10 experiencing the greatest year-over-year median home value losses. - Q: What are the main reasons for the drop in home values?
A: The main reasons include market cooling, strong inventory growth, high and growing ancillary costs of homeownership (like insurance, maintenance, and HOA fees), and new construction that has led to a supply exceeding demand. - Q: Are all types of homes affected equally?
A: No, condos and townhomes, especially in areas like Denver, are seeing significant drops due to rising HOA and insurance costs. - Q: Is this a national trend or limited to specific regions?
A: While the trend is more pronounced in certain regions like Florida, it is part of a broader national trend of market correction after the rapid growth during the pandemic.
