The U.S. housing market has been so hot for so long that it’s easy to forget it can’t stay that way forever. At some point, home prices will have to stabilize or head lower — at least according to the normal economic rules.
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In fact, some cities have already shown signs of weakness. Among those that have seen a decline in median home prices over the past year include three Texas cities — Austin, Dallas and San Antonio – as well as New Orleans, Tampa and Jacksonville, Florida, according to Fast Company. These markets could see prices continue to dip in 2025.
It’s harder to forecast what might happen a few years down the road because so many variables are involved. An analysis from U.S. News & World Report predicted that through 2029, home prices will “rise more gradually” at just above the overall inflation rate. But that scenario probably won’t play out the same way everywhere. Some cities are especially vulnerable to a major housing slowdown for reasons ranging from population declines and an oversupply of homes to negative economic trends.
Here are five housing markets that could see home values drop sharply by the end of the decade.
Home values in Austin have seen only a slight decline over the past year. But houses for sale are staying on the market longer now than they used to — a sign that the market could be cooling after years of rapid growth.
“Austin’s market skyrocketed during the pandemic, particularly with the tech industry boom, but now we’re seeing prices stabilize,” Levi Rodgers, a real estate broker and founder of VA Loan Network, told GOBankingRates in a recent interview.
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As GOBankingRates previously reported, home values in Boise continue to rise, though at a slower pace than earlier this decade. Boise could be an example of a market that can simply no longer sustain the same rapid pace of price growth.
“The pandemic relocation wave greatly benefited Boise, since prices increased due to out-of-state buyers,” Grace Chisom, a real estate expert at Alberta Property Buyers, told GOBankingRates. “Prices may adjust to reflect the decreased local income levels when migration decreases. Boise’s home prices greatly exceeded income growth, rendering the market unsustainable for locals and possibly reducing demand.”
Typical home values in Orlando have risen more than 2% over the past year, according to Zillow. But there are signs demand is cooling. As of September 30, 2024, about two-thirds of home sales were below the list price. That’s not uncommon, as many sellers price their homes above what they expect to get. But it does show there are not a ton of buyers competing for homes and driving prices higher.
