The Poll Says looks at various rankings and scoreboards that judge geographic locations, while noting that these grades are best seen as a combination of interpretation and skillful data.
Buzz: Home prices have fallen in all but 11 of the 221 U.S. metro areas since last spring’s peak.
Source: My trusty spreadsheet revisited The National Association of Realtors quarterly report on 221 real estate marketswhich tracks the median sales price for existing single-family homes.
The top line
A sprinkling of good news for house hunters is that prices fell in 95 percent of metros when comparing the first three months of 2023 to last year’s spring quarter. And 27% of those declines were double-digit declines.
That’s not a terribly surprising result after the Federal Reserve doubled mortgage rates last year in an attempt to cool the overall economy and the highest rate of inflation in four decades.
The largest nine-month price declines were in Austin (down 24%), San Francisco and Champaign, Illinois, (down 23%), Kankakee, Illinois (down 22%) and Provo, Utah (down 18%).
Best performances? Elmira, NY (up 7.9%), Owensboro, Kentucky (up 4.6%), Decatur, Alabama (up 3.6%), Hickory, North Carolina (up 3.4%) and Warner Robins, Georgia (by 3%).
Nationally, prices fell by 10% in the nine months. By region, Western state prices fell 13%, the Midwest fell 11%, the Northeast fell 10%, and the South fell 8%.
Details
How did we get here?
Price declines have been a consistent story since mid-2022. Low affordability tied to those high mortgage rates dampened enthusiasm for home buying. Economic unrest has bothered house hunters. And workers returning to offices and children returning to classrooms reduce the need for larger living spaces.
The price reversal first appeared in the third quarter of last year, with three-month price declines in 69% of the 221 metros. The US global benchmark fell 3.5%.
In the fourth quarter, three-month losses rose to 91 percent of metros, with the national median down 4.9 percent.
And the downward trend continued in the first three months of this year, with losses seen in 69% of metros.
Nationally, prices fell 1.9% in the first three months of 2023. Regionally, the West fell 4.4%, the Northeast fell 4.1%, the Midwest fell 2, 2%, and the South decreased by 0.9%.
Warning
The recent weakness in prices represents a sharp reversal from previous gains during the pandemic. Those increases were largely tied to the Fed’s previous thinking — using aggressive rate cuts to help ease the economic chill created by the coronavirus.
Remember, according to this real estate agent math, US prices are up 31% between 2022 and 2020 – with substantial regional gains in the West at 37%, the South (36%), the Northeast (25%) and the Midwest (20%). And all 221 metros have seen prices rise in those two years.
Conclusion
The traditional spring home buying season is here, and there’s a lot of buzz that prices are firming up. Is this sustainable with spiraling mortgage rates and a choppy overall economy?
Well, come back to Spring 2022 to see strong seasonal growth – US prices up 10.9%, West 9.4%, Midwest 15.9%, Northeast 11.2% and the South with 10.2%.
Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
