Since 2019, home prices have skyrocketed beyond the record amount of the Great Depression. Homes have seen over 30% increase in prices till September 2022 but have now begun to face a steep drop that’s unprecedented and likely to continue as long as the rise.
As reported by AEI, the top 10 cities with the steepest house price drop so far are San Jose, Austin, San Francisco, Seattle, Denver, San Diego, Portland, Las Vegas, Phoenix, and Colorado Springs. However, many cities like Blackfoot, Idaho, are better markets but are overlooked.
If you want to find the cheapest yet best house in your price range, I’ve got you covered. I’ll tell you how the numbers can trick you and about MAI, which is a real look at any real estate market.
A Deeper Look Into The Top 10
It’s common to see houses price rises and falls being quantified with percentages. It’s a common but very deceiving metric. With that in mind, let’s take a look at the top 10 falling real estate markets.
- San Jose, California, is down by 10.7%.
- Austin, Texas, is down by 10.3%.
- San Francisco, California, is down by 8.5%.
- Seattle, Washington, is down by 8.2%.
- Denver, Colorado, has dropped by 5.8%.
- San Diego, California, has lowered by 5.2%.
- Portland, Oregon, is down by 5.1%.
- Las Vegas, Nevada, has dropped by 4.8%.
- Phoenix, Arizona, has lowered by 4.4%.
- Colorado Springs, Colorado, has dropped by 4.2%.
This was reported by AEI Housing Center in October 2022, and even steeper drops were forecasted to occur in the coming months. So far, prices in these areas have fallen by an additional 1-2% at least.
But prices in most states are still over 11% higher than what they were in 2021. It’ll take a considerable amount of time before the prices settle below the 2020-2021 prices, if that happens at all.
Besides, percentages won’t tell you the actual price. The median sale price can be way higher than conceivable, with demand being too high for a price decline. Let’s look at the states these cities are in and see the real picture.
- California’s median sale price is $759,500 and the median days on the market are 36.
- Washington’s median sale price is $619,000 and the median days on the market are 46.
- Texas’s central median sale price is $563,212 and the median days on the market are 50.
- Colorado’s median sale price is $549,500 and the median days on the market are 29.
- Oregon’s median sale price is $503,300 and the median days on the market are 28.
- Arizona’s median sale price is $432,400 and the median days on the market are 46.
- Nevada’s median sale price is $441,100 and the median days on the market are 47.
It’s clear that California, Washington, Texas, or Colorado’s dropping prices still put most houses out of the average buyer’s reach. You may have room for negotiation in Austin, Texas, as it has the longest median days on the market. But that comes with compromises.
Median sale price and days on the market aren’t comprehensive indicators. Inventory, houses sold, hold time, and many other factors have to be considered, and these can often present contradictory data. Thankfully, MAI can sum it all up for you.
Market Action Index, And The Truth
The Market Action Index, or MAI, is a measure of the balance between supply and demand, which primarily considers present sales and present inventory. MAI value over 30 is categorized as a hot market or a seller’s market, and below 30 is considered a buyer’s market. 27-33 is considered neutral grounds, where the buyer and sellers have equal leverage.
Now let’s take a look at the MAI value of these mentioned markets.
- San Jose, California, is at 58.
- Austin, Texas, is at 36.
- San Francisco, California, is at 42.
- Seattle, Washington, is at 48.
- Denver, Colorado is at 47.
- San Diego, California, is at 48.
- Portland, Oregon, is at 42.
- Las Vegas, Nevada, is at 38.
- Phoenix, Arizona, is at 40.
- Colorado Springs, Colorado, is at 40.
Once more, Austin, Texas, seems like the best of the lot, but it’s on an upward trend. The MAI value for most of these markets is either steady, dropping slowly, or rising. None are truly ideal for a buyer.
The Hidden Gems
Mainstream real estate markets analysis summarizes by popularity. Many markets, including many buyer’s markets in Idaho, are overlooked for this very reason. Let’s take a look at Blackfoot in November 2022 for an example.
- Blackfoot’s MAI value is 33.
- Median price of new listings is $284,900.
- Median days on the market are 70.
- 55% of sellers so far have decreased prices.
- 36% of sellers have relisted.
- Market action is falling, at 33.
This market has room for negotiation, rising inventory, dropping prices, and a price range that most will find affordable. Yet the best houses listed in Blackfoot are just going ignored, waiting for buyers. You can see the same trend in Middlesbrough, Selma, Toledo, Tampa, and more.
With a mortgage rate of around 7%, you cannot afford to stick to the trendy real estate markets. Prices are far from affordable, and inflation won’t make things easier. To get a house that you’ll want to live in for cheap, do your research on the markets that go overlooked. Remember to always take a hard look at all the data and read between the lines for the true picture.