For some time, Austin's housing market has been the epicenter of America's housing crisis. However, a new city has now overtaken the Texan capital in the most critical measure—falling prices—and it could not be more different.
Austin's Perfect Storm
Austin experienced a major housing boom during and after the pandemic, as people flocked from liberal, high-tax cities for space, sunshine, and affordability. But many newcomers soon left, and locals were priced out. Builders constructed new homes to meet pandemic demand, only to see that demand vanish. This created a perfect storm of falling prices, high inventory, and fleeing residents.
Now, Denver, Colorado, is seeing home values drop at the fastest rate in the country. According to the S&P Cotality Case-Shiller Index, prices in Denver have fallen 2.2 percent on average year-over-year.
Denver's Decline
While Denver did not experience the same pandemic boom as Sun Belt cities like Austin, Tampa, and Phoenix, it saw a surge in inventory last spring. Experts had long forecast a price decline. Realtor.com reports the median listing price in Denver is around $545,000, with a year-over-year change of more than -5 percent and a three-year change of -14 percent. These figures differ from the S&P index, which tracks home values rather than listing prices.
Local real estate agents attribute the decline to several factors: a slowdown in migration to Colorado, rising insurance costs, and weaker demand for condos and townhomes, which make up a large share of Denver's market.
Strong Markets in Northeast and Midwest
In contrast, the strongest housing markets remain in the Northeast and Midwest. Chicago leads with 5.0 percent annual growth, followed by New York at 4.7 percent and Cleveland at 4.2 percent. Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, notes, 'The 7.2 percentage point spread between Chicago and Denver illustrates how localized the housing story has become.'
More than half of major US metros posted year-over-year price declines in February. 'The housing slowdown has broadened well beyond its Sun Belt origins,' says Godec. 'The geographic mix has shifted meaningfully.'
Buyer's Market Nationwide
Beyond falling prices, most US metros are now firmly in buyer's market territory, with more supply than demand. As of early April, there are 46.3 percent more sellers than buyers nationwide, the widest gap on record. The last time conditions were this favorable to buyers was during the 2008 housing crash. Now, the causes differ, but the effect is similar: too many homes, not enough buyers, and growing pressure on prices.
Only five metro areas remain seller's markets, all in the Midwest and East: Newark, NJ; New Brunswick, NJ; Nassau County, NY; Montgomery County, PA; and Milwaukee, WI. Newark is the strongest, with buyers outnumbering sellers by about 31 percent.
