Real Estate

Crash or fix? Home prices are falling in these 15 cities across the country.

After several years of rising home prices amid tight inventoryas well as High interest rates put the brakes on home buying and investing, the first few dominoes appears In some cities across the country, prices have fallen after falling. Is this a shock or the beginning of one? Great The trend?

15 US markets recorded declines in home values.

According to one Recent report According to the National Association of Realtors, 7% of U.S. housing markets experienced a decline in value in the first quarter of 2024. But before you Check your credit score. And call your mortgage broker Let’s put this in perspective: These markets represent 15 of the 221 surveyed, so talk of a national price meltdown may be premature.

“Surprisingly, home values ​​increased in more than 90 percent of the nation’s metro areas despite experiencing the highest mortgage rates in two decades,” said NAR’s chief economist. Lawrence Yoon said the report. “In the current market, rising prices are a direct result of an insufficient supply of housing that cannot meet the full demand.”

gave 15 markets showing slide in values are:

Metro area Year-to-year change in house prices
Elmira, New York -15.1%
San Antonio-New Braunfels, Texas -4.6%
Cape Coral Fort Myers, Florida -4.4%
Panama City, Florida -3.8%
Boulder, Colorado -1.7%
Salem, Oregon -1.7%
South Bend-Mishawaka, Indiana-Michigan -1.6%
Logan, Utah-Idaho -1.3%
Baton Rouge, Louisiana -1.1%
Peoria, Illinois -1.1%
Shreveport-Bossier City, Louisiana -0.9%
Myrtle Beach-Conway-North Myrtle Beach, South Carolina-North Carolina -0.6%
Austin Round Rock, Texas -0.3%
Crestview-Fort Walton Beach-Destin, Florida -0.2%
Little Rock North Little Rock Conway, Arkansas -0.1%

Why have house prices fallen in these markets?

According to Redfin DataElmira, New York on the Pennsylvania border, is extremely affordable, with an average price of $90,213 as of April 2024. however, Local Realtors Association states That first quarter median home price is $146,000, with sales down 10% year-over-year. This That compares to a national median home price of $393,500.

About 30 percent of all metro areas The first quarter of 2024 saw a double-digit increase in prices. Drilling down to Elmira, however, the Elmira-Corning Realtors Association shed some light on the issue, with recent data showing the number of homes sold in the area last year. 20.5 percent decrease Compared to 2022. The number of homes sold in December 2023 was 31.4% lower than the previous December.

A tipping point

The main reason for the decline is that despite its modest prices, Elmira — the city and county seat of Chemung County — like most markets on the declining list, has experienced unsustainable sales price growth. It increased. 17.8% More numbers than 2020 in November 2022 A more modest development Interest rates then rose until it reached a tipping point, with no rate cut on the horizon.

The same pattern seems to hold true for other cities, such as Cape Coral, be Experienced a Increase in housing supply up to 50%, which has loosened the market and caused prices to fall.

What do falling prices mean for investors?

Declining home prices may signal a window of opportunity for investors. Where declines have been substantial, such as in Elmira, predicting how far prices are likely to fall and timing any purchases before interest rate cuts allow investors to take advantage before prices rise again. can give

However, just buying real estate that has fallen in value to its normal level, but making sure you have tenants to fill it once it’s bought and settled is a must. This That’s where some research comes in.

If you want to live and work in Elmira., For example, You may have job opportunities. Limited. However, Elmira was chosen as the winner. $10 million Downtown Revitalization Initiative In the southern tier And Strategically located Between major trade corridors. In addition, the downtown area is active and walkable, and the healthcare industry is thriving with some significant development and new housing projects.

Elmira College is also a local attraction. Planning for a modern brewery-style bar with a large gaming area. doing center town social work, Bringing people downtown year-round. New restaurants, a juice bar, and a jazz club are also in the works.

For opportunistic investors, given the low barrier to entry, small cities like Elmira can be a viable way to buy income-producing real estate at the start of an urban renewal period. however, This should be emphasized That’s a small, down-to-earth city jump on board. Start A recovery plan is a high-risk, high-reward scenario. Elmira has long been one A reputation for crime and lack of employment. Conversion is not guaranteed in any way.

Opportunities for Flippers

Low inventory and rising home prices have seen fear. The flappers Those who have recently found the deal to be a tidy profit despite rising mortgage rates. Despite the overall decline in Philips nationally, those who have been in the game have benefited from a “stronger sales environment,” according to New. Burns, Sunday, and Kiwi Fix and Flip SurveyAs reported by the National Real Estate Data Company. The costar.

“Low inventory is creating the current frenzy,” one Seattle flipper said in the survey. With high demand for flipped homes, “once prices drop, it’s going to be unprofitable.”

Now that home prices are starting to fall in some markets, flippers who are confident of a rebound after interest rate cuts can plan their flips accordingly, given the Federal Reserve’s rate hikes. May complete projects to coincide with anticipated reductions in scale.

Final thoughts

Low inventory in most parts of the country means it’s unlikely we’ll see a decline in home prices despite high interest rates. Distressed buyers are priced out of the market, facing even higher prices when prices come down.

However, in areas where the market has practically said “enough is enough” and home prices have begun to fall, there are windows of opportunity for investors. The great unknown, of course, is interest rates. It’s not worth losing money in the negative Cash flow Every month or risk flipping, watch out for rising prices if you’re not in a strong financial position to weather the storm.

However, for those who are well-positioned and can play the real estate long game, temporary pockets of falling prices present an undeniable opportunity—one that still needs to be thoroughly evaluated. Potential market analysis.

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Note via BiggerPockets: These are the opinions expressed by the author and do not necessarily represent the opinions of BiggerPockets.

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