During the years of the pandemic, the big story in real estate was rising home prices. This year, that story may be changing.
On average across the country, annual list prices for houses have dropped for the first time in years, according to Realtor.com. Basically, buyers are looking at lower home prices this May than they faced in May one year ago.
In many cases, this is a result of the market correcting itself as the pandemic recedes.
“Those markets that got the most juiced during the pandemic — where the prices really took off — are the markets where they’re now suffering the biggest declines because affordability has been the hardest there,” Mark Zandi, Moody’s Analytics chief economist, told the real estate site.
While the drop in prices is a nationwide development, it’s not happening everywhere. And the real estate bargains are better in some cities than in others. Realtor.com wanted to find out where the prices have dropped the most, so they studied the list prices in the 100 biggest metropolitan areas (cities plus the surrounding towns). They compared the median price per square foot of homes that sold in May last year versus homes that sold this May. Then they compiled a list of the 10 cities where buyers can find the best deals this summer.
Realtor.com relied on price per square foot as their metric of comparison, explaining that this figure “accounts for changes in the mix of homes for sale.” In other words, “the price per square foot compares apples to apples.”
From that list, here are the top five cities where the median home listing price per square foot has dropped the most.
1. Boise, Idaho, Median Listing Price: $609,875
Boise tops the list of metro areas with dropping home prices over the last year — with a percentage price drop (per square foot) of -7.8%. When the pandemic hit, lots of people moved here to take advantage of the mountains (and the outdoor opportunities that come with them) and the bigger-than-average homes. But the influx of buyers between May 2020 and May 2022 drove prices up by 63%. Now, home prices are coming back down.
In fact, Boise real estate agent Rob Inman told Realtor.com that there are a number of homes available that are much lower than the median listing price. “Now, you can actually find stuff between $350,000 and $425,000, right in that entry-level price point,” he told the site. “There’s even new construction.”
2. Austin, Texas, Median Listing Price: $583,751
Austin’s median listing price drop was similar to Boise’s, at -7.7%. That’s not surprising, since the pandemic price growth in Texas’ capital was the highest of all the cities on this list. Home prices rose by 75% between February 2020 and May 2022.
According to Realtor.com, “the median home list price, not standardized for size, went from about $364,000 to almost $630,000.”
Now that the prices are falling, home buyers are being welcomed by a more affordable market. The site pointed out a fully-furnished, one-bedroom condo (which the listing says is “just steps from some of the best bars and restaurants in East Austin”) as an example of the relative bargains available right now. It’s listed for $420,000 after a recent $5,000 price reduction.
3. Myrtle Beach, South Carolina, Median Listing Price: $366,075
This beach town and popular summer destination had a housing boom during the pandemic when people flocked here for its golf courses, boardwalk activities and amusement parks. But time and lots of new construction have brought prices back down again, with a median listing price drop of -7.3% over the last year.
This recently remodeled home, which according to the listing is “just a short drive away from the beach,” is selling for $284,900 (after a $15,000 price drop).
4. Phoenix, Arizona, median listing price: $529,450
In Phoenix, home prices soared by 50% during the pandemic. Now they’re beginning to drop again — at a rate of -5.6% over the last year, based on median price per square foot.
Still, it’s less of a price drop than in, say, Boise. With plenty of land to build on in Arizona, lots of homes are being constructed here at a fast clip.
“Developers can keep sprawling,” local real estate agent Angela MacDonald told the site. “Without the new homes, we wouldn’t be able to keep up with the demand for people moving here.”
But Realtor.com points out that “even with the price decline, sellers still have a bit of an edge in the market. There are still many buyers and not as many homes to go around.”
5. Sarasota, Florida, median listing price: $549,900
Lately, the number of houses for sale in Sarasota has really increased. In fact, Realtor.com reported that “there were nearly 2.3 times the number of active listings this May compared with last.” And they’re taking almost twice as long to sell, at an average of seven and half weeks.
Naturally, the inventory glut has led to a drop in home prices — at a rate of -4.7% over the last year. This updated, midcentury 3-bedroom home, which the listing describes as “close to Downtown and an easy drive to our wonderful beaches,” is listed at $499,900, after a $25,000 price drop.