Real estate

10 Fastest Cooling U.S. Housing Markets

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After soaring growth during the pandemic, the U.S. Boismarket housing market is starting to cool — and it’s happening faster along the West Coast.

The fastest-cooling real estate market is San Jose, Calif., according to new Redfin analysis, which ranked U.S. metro markets based on median sales prices, year-over-year inventory changes and other factors between February and May 2022.

Six of the top 10 markets are in California, including three in the Bay Area, and four other western cities round out the list.

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By comparison, Albany, New York, was the slowest housing market to cool, followed by El Paso, Texas, and Bridgeport, Connecticut, according to Redfin’s analysis.

One of the main reasons for the nationwide cooling is rising interest rates, which kicked off “the affordability factor,” said Melissa Cohn, regional vice president of William Raveis Mortgage.

Indeed, more expensive regions, such as Northern California, where homes can easily sell for $1 million to $1.5 million or more, have been hit harder by 30-year fixed mortgage rates approaching 6 %, according to the report.

For example, if you buy a million dollar home with a 20% down payment, your monthly mortgage payment may be around $5,750 with an interest rate of 6%, depending on taxes and l home insurance, which is $1,400 more than a 3% down payment. interest rate, according to the report.

10 Fastest Cooling U.S. Housing Markets

Here are the US markets that have cooled the most over the past year, according to Redfin, and their median sale price in May 2022.

  1. San Jose, CA – $1,560,000
  2. Sacramento, CA – $610,000
  3. Oakland, CA – $1,070,000
  4. Seattle, Washington—$850,000
  5. Stockton, California — $576,000
  6. Boise, Idaho – $550,000
  7. Denver, Colorado—$612,000
  8. San Diego, California — $875,000
  9. Tacoma, Washington – $575,000
  10. San Francisco, CA – $1,620,000

The 10 Slowest Cooling U.S. Housing Markets

Here are the U.S. markets that have been the slowest to cool over the past year, according to Redfin, and their median sale price in May 2022.

  1. Albany, NY — $289,000
  2. El Paso, TX—$238,000
  3. Bridgeport, Connecticut – $570,000
  4. Lake County, Illinois — $324,400
  5. Rochester, NY — $212,100
  6. New Brunswick, New Jersey — $465,000
  7. Cincinnati, Ohio—$265,000
  8. Akron, Ohio—$200,000
  9. New Haven, Connecticut – $310,000
  10. Virginia Beach, Virginia — $325,000

‘Cooling’ doesn’t mean buyers will see price drops

Although growth is slowing in some markets, experts still do not expect significant price declines in most markets.

“One of the reasons we’ve had this frothy, overheated market is simply the lack of inventory,” Cohn said.

At this point, according to Redfin’s analysis, some of the faster-cooling markets have seen more inventory coming into the market. In Seattle, for example, inventory was up 40.9% from a year earlier.

House prices continue to rise, albeit more slowly. The median year-over-year home price growth forecast fell to 4.4% from 5.8% in June, according to the Federal Reserve Bank of New York’s consumer expectations survey.

“The speed of price increases will certainly decrease significantly,” Cohn said, predicting a “healthy normalization” in the housing market.

One of the reasons we’ve had this frothy, overheated market is simply the lack of inventory.

Melissa Cohn

Regional Vice President at William Raveis Mortgage

With many buyers paying cash over the past two years, some buyers have forgone appraisals, inspections, or even viewing the home in person.

However, changing market conditions can provide buyers with more time to view properties, make an offer and buy the right home, Cohn said.

What Air Conditioning Markets Mean for Homeowners

If you recently purchased a home, you may have concerns about the future value of the home, especially in a down market.

“The good news is that these buyers have most likely been locked into a lower interest rate, so payments should be more manageable than someone buying now,” said Matthew Chancey, certified financial planner at CoastalOne in Tampa. , in Florida.

If you overbid the property, you risk being “underwater” in the short term, meaning you owe more on the mortgage than the home is worth, he said.

This is not a situation that you necessarily have to rush to remedy. Kyle Newell, an Orlando, Fla.-based CFP and owner of Newell Wealth Management, said underwater owners should funnel extra cash into emergency savings, such as possible job loss, rather than rushing to pay off the mortgage.

Experts generally recommend setting aside three to six months of living expenses. But some advisors suggest more for more flexibility.