May 30th, 2019 12:11 PM by Eric Willner
Radio Show Notes 5/29/19 Wednesday: The Top 10 Cities Where Home Prices Are Down Will Surprise You!
By Eric Willner, Host of The Real Estate Show, America’s longest running daily radio show about real estate
Read a summary of the show below or
The Top 10 Cities Where Home Prices Are Down Will Surprise You! Today, on The Real Estate Show, Radio Show Host Eric Willner shares a recent article from Realtor.com showing the top 10 cities where prices fell the most and why. It was not because of a poor economy, rather a strong one in some cases, but affordability was an issue in almost all cases.
Below are sections of Realtor.com’s article:
Falling Stars: You Won't Believe the 10 Cities Where Home Prices Are Down the Most
By Lance Lambert | May 20, 2019
The tectonic plates of America's major real estate markets continue to shift beneath our feet. Little more than a year ago, unstoppable home price increases seemed to be the new normal just about everywhere. Go, go, go! It was a never-ending party for sellers, and mass anxiety for price-squeezed buyers. But then last fall came signs of a housing slowdown, as big-city prices began to level off—or in some markets actually drop. Was a housing bubble about to burst?
Well, not quite. Nationally home prices still rose 6.9% year over year in April. But here's the thing: That's actually the lowest price growth in five years. And according to the latest data, 1 in 5 metropolitan areas is now seeing decreases in home prices, compared with half as many a year ago. So what are the places moving from a seller's market to a buyer's? The realtor.com® data team set out to find those metros where home prices are falling the most.
"In a lot of markets buyers are hitting an affordability ceiling," says Chief Economist Danielle Hale of realtor.com. "Prices just can't keep rising if buyers can't keep up. They are dropping out, and that's why we're seeing prices adjust [down] in some markets."
There are some surprises on this list—including some of the highest-profile markets in the country (hello, San Francisco Bay Area!). It turns out there is a limit to how high home prices can go, even in some of America's most alluring, if overheated, places.
Some markets are seeing price drops due to overbuilding: This creates too much supply and not enough demand, so prices naturally fall. And just like in past years, in other areas, natural disasters devastated lives, communities, and local real estate.
"A disaster will affect your ability to market" your home, says Orell Anderson, president of Strategic Property Analytics, in Laguna Beach, CA. It can boost home prices and rents in unaffected pockets as locals compete for housing. But it can also hurt an area's image as folks don't want to suffer through another disaster. "The market will demand a discount."
To figure out where prices are down the most, we looked at the change in median list prices on realtor.com from April 2018 to April 2019 in the 250 biggest metropolitan areas.* We filtered out markets where price per square footage was up over that period. And we limited the ranking to no more than three metros per state.
So where are prices declining the most? Buckle up, let's take a cross-country trip.
1. San Jose, CA
Median list price: $1.1 million
Median list price change: -8.4%
Santana Row in San Jose, CA
Yes, you read that right. Perennial hottest market in the U.S., San Jose is seeing the steepest declines in home prices these days. For the past few years, home prices in this city at the heart of Silicon Valley have soared at double-digit rates. But last fall, red flags started to appear. Sellers began slashing list prices, with the number of price reductions jumping 200% over the previous year. Now prices are plummeting faster than anywhere else in the U.S.
Time for a quick reality check: None of this means that San Jose has become a bargain. It's still America's most expensive real estate market. But therein lies the problem—prices just shot up too high. From April 2017 to April 2018, median list prices soared a remarkable 28%. And even in the San Francisco Bay Area, what comes up must come down. Eventually.
"When [prices] jump that quick, it can produce a reaction with buyers, who say, 'I can't do it anymore, that is just too expensive,'" says Patrick Carlisle, Bay Area chief marketing analyst at the real estate firm Compass.
Federal tax law changes also played a role. Homeowners can now deduct only up to $10,000 in property and income taxes combined. Plus, the amount of mortgage interest deduction folks can write off on their taxes was reduced. In pricey areas like San Jose, that can translate into a big financial hit.
This has led dwellings to sit longer on the market, climbing from a median 19 days to 27 from April 2018 to April 2019. Meanwhile, the amount of abodes currently for sale has jumped 92%.
Here is a link to the full article:
The Real Estate Show provides a summary of the list here:
2. Oxnard, Calif.
• Median list price: $681,100
• Median list price change: -5.4%
3. College Station, Texas
• Median list price: $265,000
4. Bridgeport, Conn.
• Median list price: $750,000
• Median list price change: -4.9%
5. San Francisco, Calif.
• Median list price: $948,300
• Median list price change: -4.1%
6. Hilo, Hawaii
• Median list price: $481,600
• Median list price change: -3.5%
7. Cape Coral, Fla.
• Median list price: $300,000
• Median list price change: -3.3%
See the full list at realtor.com®.
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Do these things in real estate, and transform your current situation into the life and income source you dreamed of. Find out more on today’s episode and learn more about Real Estate Investing and learn HOW - by listening to The Real Estate Show with Eric Willner , Live every weekday morning at 8 o’clock (EST) on Florida’s Money Talk Radio station WSBR AM740, FM 96.9, and FM 103.9. You can also hear us on the free apps: iHeart Radio and TuneIn. Recorded Rebroadcasts are available 24/7 on Facebook. Please share this and our Facebook updates.
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Eric Willner is the Host and Founder of The Real Estate Show, an informative show about how to buy, own, and improve real estate the right way, on autopilot. - The Automatic Landlord way. (AutomaticLandlord.com) You can reach Eric Willner at Eric@Ericwillner.com or 888-595-7779.
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