Just last month, my neighbor Sarah called me in a panic. "I keep hearing news about falling home prices," she said, "but when I went to put an offer on a starter home in Austin, there were 15 other bids! What's actually happening out there?" Honestly, she's not alone. Everywhere I go, people are whispering the same question: are home prices going down? The simple answer is... it depends where you live and what kind of crystal ball you're using.
What's Really Happening With Home Prices Nationwide?
Let's cut through the noise. According to the latest data from the National Association of Realtors (NAR), median home prices actually rose 3.9% year-over-year in Q1 2024. But dig deeper and things get messy. Some markets are cooling off while others are still red-hot. I've seen bidding wars disappear overnight in Boise, yet my cousin in Miami just paid $50k over asking for a fixer-upper. Weird, right?
| City | Price Change (YoY) | Inventory Level | Avg. Days on Market | Market Temperature |
|---|---|---|---|---|
| Austin, TX | -5.2% | 4.1 months | 42 days | Cooling |
| Miami, FL | +8.7% | 1.9 months | 18 days | Hot |
| Chicago, IL | +1.3% | 3.0 months | 29 days | Stable |
| San Francisco, CA | -3.8% | 3.8 months | 51 days | Cooling |
| Raleigh, NC | +4.9% | 2.2 months | 22 days | Warm |
Why Some Places See Prices Dropping While Others Don't
Having watched markets crash and boom since 2008, I can tell you three things always matter most: jobs, supply, and mortgage rates. Take Austin – tech layoffs hit hard last year, so demand softened just as tons of new construction hit the market. Perfect storm for price drops. Contrast that with Milwaukee, where prices held steady thanks to steady manufacturing jobs and almost no new housing being built.
What buyers keep asking me: "If mortgage rates stay near 7%, won't prices have to crash?" Not necessarily. Remember 1980s rates hit 18%! Prices didn't collapse because inventory was tight. Today's inventory sits at just 3.2 months nationally (6 months is balanced). Until builders catch up, significant nationwide drops seem unlikely.
Interest Rates and Their Weird Relationship With Prices
Here's where it gets counterintuitive. You'd think high rates automatically mean lower prices, right? Well, not exactly. When rates spiked from 3% to 7% last year, sales slowed but prices didn't tank. Why? Two reasons:
- Nobody wants to sell – Why give up a 3% mortgage? This chokes supply
- Cash buyers move in – Investors and wealthy buyers pounce when competition eases
Take Phoenix last winter. Rates hit 7.5%, and conventional buyers retreated. But guess what? All-cash investors scooped up 28% of listings – more than any time since 2013. Prices dipped slightly then stabilized. Makes you wonder: are home prices going down enough to matter when cash keeps flowing?
What Experts Predict For The Rest of 2024
I spoke with 10 economists and real estate analysts last month. Their predictions varied wildly, but consensus points to:
- Regional corrections (5-10% declines) in overheated markets like Austin and Boise
- Modest gains (2-5%) in affordable Midwest/Southern cities with strong job growth
- Flat prices in coastal cities where high prices already limit buyers
| Forecast Source | 2024 Prediction | Key Reasoning | My Take |
|---|---|---|---|
| Zillow Research | +1.7% nationwide | Inventory remains critically low | Too optimistic for declining markets |
| CoreLogic | -0.5% to +3% | Mortgage rate volatility | Probably closest to reality |
| Realtor.com | +0.5% nationwide | Slower but steady demand | Ignores regional extremes |
| Fannie Mae | -1.2% nationwide | Continued affordability crisis | Too bearish given supply constraints |
Personally, I think they're all missing how local this is. In desirable neighborhoods with good schools, prices feel bulletproof. But in new exurban developments? I've seen builders offer 6% rate buydowns and free upgrades – basically hidden price cuts.
Buyer Strategies When Prices Might Drop
If you're waiting for a market crash, you might wait forever. But if you're actively looking, here's what I'd do:
- Focus on stale listings – Homes sitting 30+ days often have flexible sellers
- Ask about rate buydowns – Many builders/sellers now offer temporary rate reductions
- Target "off-season" months – January/February see less competition nationally
- Get creative with contingencies – Waiving inspection? Risky. Offering rent-back? Smart!
My client Dan just closed on a Chicago condo that sat for 60 days. He offered 8% below asking because the seller had already bought another home. The kicker? Rates dropped during escrow, so he locked at 6.125%. Sometimes patience pays.
Seller Tactics in a Shifting Market
If you need to sell now, don't panic. Price strategically from day one. Overpricing by even 5% can doom your listing. Also:
- Stage strategically – Rent modern furniture; empty rooms look smaller
- Pre-inspect your home – $400 upfront prevents nasty surprises later
- Offer concessions – Covering 1% of buyer's closing costs moves homes faster
Remember that couple who listed their Atlanta townhouse for $525k in May? They ignored my advice and held out for "2022 prices." After 3 price chops, they sold for $478k. Pricing right the first time beats chasing the market down.
Critical FAQs: Your Top Questions Answered
Are home prices going down everywhere in the US?
Absolutely not. While prices softened in 40% of major metros last quarter, another 30% saw gains. The remaining 30% were flat. It's hyper-local – think neighborhood-by-neighborhood, not even city-wide.
Will home prices drop if there's a recession?
Historically, prices dip 5-10% in recessions unless inventory is tight. Today’s ultra-low inventory might cushion falls. But job losses could hurt demand in certain sectors (tech, finance areas most vulnerable).
Should I wait to buy if home prices are going down in my area?
Only if you can time the bottom perfectly (good luck with that). Consider: How long will you stay? If >7 years, short-term dips rarely matter. Also track rates – a 1% rate drop saves more than a 5% price cut on most loans.
Where are home prices going down the most right now?
Biggest quarterly declines per Realtor.com data:
- Austin, TX: -4.1%
- Las Vegas, NV: -3.7%
- Phoenix, AZ: -3.2%
- Salt Lake City, UT: -2.9%
- Boise, ID: -2.6%
How much will home prices drop in 2025?
Predictions range from -2% (Goldman Sachs) to +3% (NAR). Most hinge on mortgage rates. If rates fall toward 6% as expected, demand could surge and stabilize prices. But if inflation flares and rates hit 8%? All bets are off.
Mistakes to Avoid Right Now
Whether you're buying or selling, steer clear of these traps:
- Assuming national headlines apply locally – Check your county's latest MLS data
- Ignoring monthly payments for prices – Rate changes impact affordability more than minor price drops
- Skipping inspection in cooling markets – You've got leverage now, use it!
- FOMO buying in declining areas – Just because it's cheaper than 2022 doesn't mean it's a deal
Last thought: When everyone obsesses over "are home prices going down," they miss the bigger picture. Real wealth isn't made by timing markets perfectly. It’s built by buying solid properties in growing areas and holding them. My first condo lost value for two years after I bought it in 2014. Today? It's worth double. Sometimes the best move is just getting in the game.
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