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As real estate and real estate-related companies continue to cut their workforces, it's become clear that it's no mirage -- the housing market is indeed cooling. Another sign? The real estate giant Redfin has experienced a nearly 92% drop in stock value since last year.

While homes are still more expensive today than they were before COVID-19 changed the world, demand is slowing, and prices are dropping. Redfin recently released data showing which markets are cooling at the fastest rate. What was a seller's market is quickly flipping to a buyer's market in these areas of the country:

Rank

Metro Area

Median Sale Price

              

Rank

Metro Area

 Median Sale Price

1

Seattle, Washington

$774,950

  11 Austin, Texas   $500,000 

2

Las Vegas, Nevada

$416,000

  12  Raleigh, North Carolina  $435,000

3

San Jose, California

$1,375,000

  13   Cape Coral, Florida  $392,000

4

San Diego, California

$800,000

  14 (tie)  Stockton, California  $550,000

5 (tie)

Sacramento, California

$575,000

  14 (tie)  Portland, Oregon  $535,000

5 (tie)

Denver, Colorado

$570,000

  16   Bakersfield, California  $350,000

7

Phoenix, Arizona

$455,900

  17   Jacksonville, Florida $365,000 

8

Oakland, California

$910,000

  18   Tampa, Florida  $377,000

9

North Port, Florida

$450,000

  19   Orlando, Florida  $391,778

10

Tacoma, Washington

$543,000

  20   Dallas, Texas $430,000 

 

Data source: Redfin

Rising interest rates

The most apparent reason for cooling markets is rising interest rates. The Federal Reserve raises interest rates in response to inflationary concerns. The higher the rates, the fewer people compete for the same asset (in this case, housing). Fewer buyers competing for housing means fewer bidding wars and softer prices.

As an example of how rising interest rates have cooled buyer enthusiasm, we'll look at Austin, Texas. A year ago, if a buyer purchased a $500,000 home in the city, their principal and interest payment would be $2,108 per month, thanks to an interest rate of 3%. Today, that same mortgage would carry a rate of around 6%, and the monthly principal and interest payment would be $2,998. The jump in payment is enough to make some buyers ineligible for a mortgage and others hesitant to jump into the fr

Posted by Apoorva Agrawal on
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