These are the 5 real estate markets most likely to depreciate in value in 2024

In 2019, the median selling price of a single-family home in the United States was $258,000. By June 2024, that number had risen to $432,700 —a 67.7 percent increase. Subsequently, housing affordability is on the minds of many, as the prospects for first-time homebuyers become more challenging facing competition from wealthier cash buyers and hedge funds.

For renters, the story is all the more telling, as rental prices have yet to see a month with an average price decrease since 2019.

As housing prices have increased, family budgets have been stretched. While unemployment remains at a historic low, economic well-being has taken a beating since pandemic-relief programs that propped up many households ended in 2021 and 2022.

Last month, the Bureau of Labor Statistics (BLS) reported a decrease in the Consumer Price Index of .01 percent. This decrease was the first recorded since mid-2022 and comes at a pivotal moment in the US economic recovery. With an election on the horizon, Democrats are hoping that prices will inch down further to compensate for stagnant wages, which in real terms remain on par with those received by workers in 2019, as they have only increased 2.7 percent relative to prices.

Access to the housing market, or at a minimum, a more affordable rental environment, will be critical for Democrats to show as housing affordability becomes a greater concern.

Zillow, a leader in the online real estate space for rentals and purchases, publishes forecasts on where the housing market is headed. Their scale within the market, which some accuse of granting the company price-setting power, allows them to compile massive amounts of data and thus project where they see prices moving up to five months down the line.

In this article, we will examine the 100 largest cities tracked by Zillow and then expand our scope to the 300 largest on the list. Around half of the cities in the top 100 have populations under 200,000, while the media of those between 200 and 300 have populations under 40,000.

Top 100 - where are prices falling?

Zillow publishes three forecasts: one that looks a month ahead, another that looks a quarter ahead, and the third that evaluates prices half a year out. We will focus on cities where Zillow projects prices to fall in the latter two forecasts.

Zillow expects prices to fall by three percent in Austin, Texas, by the end of September. In June, the median price of a home on the market in the capital city was $550,000.

Six states are represented on the list, with only California (3), Texas, and Louisiana (2) taking more than one spot.

When looking a little further down the line to where prices will stand at the end of June 2025, New Orleans, Louisiana, and three other cities overtake Austin. Additionally, San Fransisco, California, one of the country’s most expensive rental markets, sees some relief, taking the second spot with prices expected to fall by -3.3 percent. The current median listing price of a home in San Fransisco, Oakland, and Hayward is $998,000.

Washington, DC, Baltimore, Maryland, and Portland, Oregon, knock Seattle, Washington, Stockton, California, and San Antonio, Texas, out of the top 10.

Top 300 - trends and differences

Aside from New Orleans, the top 10 cities where housing prices are expected to fall by the most significant percent by next June are all smaller than those seen in the top 100.

However, one clear trend becomes evident: residents of Louisiana should prepare for prices to fall. Of the top 10 cities expected to see the largest decreases in prices, six are found in the southern state. The only other states to have a city appear on the list are the country’s most populous, California (Santa Rosa and Chico) and Texas (Beaumont and Midland).

The data shows a concerning trend: Most of the top 300 communities —200—are expected to see prices increase over the next year. That list is led by Knoxville, Tennessee, where prices are forecasted to rise 4.7 percent.

The Fed may announce rate changes this week

As inflation shows signs of slowing and the labor competition market signs of softening (nearly 1 million more workers were unemployed in June 2024 than were a year earlier), the Federal Reserve could begin to lower interest rates. High interest rates have been one of the main drivers of higher home prices, as the cost of a mortgage shot through the roof, pricing many potential buyers out of the market and placing many potential sellers on the sidelines, unwilling to take on a more expensive mortgage. As rates come down, more sellers may place their homes on the market, increasing supply, lowering received and bringing down prices.

The Federal Reserve will announce any changes to interest rates on Wednesday, July 31.