Zillow has forecast that house prices are set to tumble in several of America’s largest cities. By the end of November 2024, they predict a decline in 34 out of the 50 biggest US cities. This shift in the housing market is a significant one, considering the usually robust nature of these urban hotspots.
What’s Causing the Drop?
There are a couple of key reasons behind this expected downturn. Firstly, there’s a mismatch in the market: a shortage of supply or willing buyers in these areas. This imbalance is expected to drive prices downward.
Another major factor is the rise in mortgage rates. As these rates climb higher, the cost of buying a home becomes less affordable for many. This financial squeeze is causing potential buyers to hold off, adopting a ‘wait and see’ approach before committing to such a significant financial decision.
Good News for Buyers
Despite the gloomy forecast, there’s a silver lining for those looking to buy. In these tougher market conditions, fewer buyers will likely find themselves competing against flippers – investors who buy properties to renovate and sell them for a profit.
Additionally, city center dwellers have something to look forward to. There’s a so-called ‘multi-family construction boom’ underway, which could offer more options and potentially better deals for those keen on urban living.
Where Will the Biggest Drops Occur?
Zillow has pinpointed specific cities where the steepest falls are expected. Leading the pack is San Jose, California, with an anticipated price drop of 6.1%. Following close behind are New Orleans with a 6% drop, San Francisco at 4.8%, Minneapolis at 3%, and New York City at 2.9%.
The Overall Picture for the US Housing Market
Despite these localised dips in major cities, it’s not all doom and gloom for the US housing market as a whole. Zillow predicts that, overall, prices across the United States should remain relatively stable throughout 2024. This means that while urban areas might see a decrease, other regions could balance the scales with steadier prices.