Planning to buy a house? Experts say home prices could fall sharply in these 4 states next year

The adage ‘what goes up must come down’, didn’t seem much to apply to the housing market as over the past few years as prices surged in the wake of the covid-19 pandemic. The Great Migration exposed the housing shortages present in markets across the United States and ultra-low mortgage rates helped fuel a buying frenzy causing housing costs to soar.

However, while some metro areas are expected to continue to see prices grow over the coming year, some relief is forecast for homebuyers in what had been some of the hottest markets in recent years. That is thanks to the housing market slowing much faster than initially predicted at the beginning of the year.

This is mainly due to affordability issues from the high prices and high mortgage rates pushing homebuyers to the sidelines noted Zillow in its July report on the housing market. But the online real estate company and marketplace also said that “affordability and access is gradually improving where builders have been able to keep up with demand.”

“Metros where price corrections are steepest are among those with the largest increase in inventory compared to before the pandemic,” Zillow stated. Here’s where prices are expected to fall over the next year.

Four states where homebuyers will see lower prices

Metro areas in Florida and Texas have seen the biggest decrease in home values over the past year according to Zillow data. Tampa has seen prices fall the fastest at 6.2% while in Austin the drop has been 6%. They are followed by Miami, 4.6%, Orlando, 4.3%, and Dallas, 3.9%, rounding out the top five.

All of these, with the exception of Miami, are among the top ten for home building permits from 2020 to 2024 notes Zillow. Not only has this given buyers more choice but also sellers who want to move, thus making existing supply available to the market.

GOBankingRates notes that there may be signs of a potential housing crash in both of these states.

Two other states that are seeing prices fall, but not as fast, are California and North Carolina. Average home values are down by 0.6% from last year across each state. In the case of California, the personal finance and banking website says that with home sales already down 37% from their pandemic peak, it is unclear how much further they could fall.

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