10 Housing Markets That Will Plummet in Value Over the Next 5 Years

Are you looking to purchase real estate ? Whether you are a seasoned investor looking for your next buy or a prospective retiree trying to find a stable home out of state , understanding where the market is headed is important. In this article, we’ll cover ten housing markets that will likely plummet in value over the next five years, helping you make an informed purchase decision.

While you’re at it, you may also be interested in the 20 most affordable cities .

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San Francisco, California

The Bay Area has long attracted residents; however, the housing market seems to be struggling. For one, large department stores, like Macy’s and Nordstrom , are leaving the area. In addition, sellers are having trouble closing deals at the listing price, with a 2-bedroom condo selling for $675,000 in April 2024 after being bought for $1.25 million in 2019.

“This tech hotspot (San Francisco) has been thriving,” says Yosef Adde, founder of I BUY L os Angeles. “I have a feeling a reality check is on the way. With remote work becoming more common, many people are leaving due to the city’s costs. It’s like witnessing a gold rush. The median home price has already dropped by 8.2% compared to last year. I believe this decline will continue.”

Read: 5 Worst California Cities To Buy Property Over the Next 5 Years, per Real Estate Agents

Austin, Texas

If you’re considering a move to Texas, steer clear of purchases in Austin. Re dfin found that the area has home prices 28% higher than the national average. Not only that, but 39.8% of homes have price drops, and 11% fewer homes have been sold compared to the previous year. These factors indicate cooling over the next few years.

“Austin is another market that gives me pause,” says Adde. “It has been a favorite among real estate investors, but I worry that it has become a victim of its success. The influx of tech companies and employees has driven prices to levels. It feels similar to watching a balloon being inflated too much — eventually, it will burst. With home prices rising by 32% in the past two years, a correction appears inevitable.”

New York City, New York

Did you know that 31% of homebuyers in New York City started their searches outside city limits? Redfin’s data shows that the median days on the market for homes in New York City is a whopping 65 days. Additionally, the number of homes sold decreased 4.6% year-over-year. Taking your search to a neighboring metropolitan area might be beneficial to preserve your investment.

Denver, Colorado

According to Redfin , the Denver area is also experiencing real estate cooling, with 45.2% of homes having price drops. Even though homes sell quickly, sale prices are dropping, indicating a declining housing market.

Miami, Florida

If the nightlife crowd is appealing to you, you might have started to search for homes in Miami. However, before you put in an offer, know that Redfin found that the median time on the market is 80 days. The number of homes sold has decreased 8.1% year-over-year, and the cost of living in Miami is 18% higher than the national average. These items indicate a market decline in the near future.

San Antonio, Texas

Like many other cities on our list, San Antonio is experiencing a 10.8% year-over-year decrease in homes sold. Similarly, the average days on the market increased 12 days year-over-year to 47, according to Redfin . This means if you purchase a home in San Antonio, you may have a difficult time selling it for a gain in a few years.

Seattle, Washington

Currently, the cost of living in Seattle is 45% higher than the national average, according to Redfin data. Couple this with 30.1% of homes that have price drops, and the Seattle housing market will face a decline in the next five years.

Phoenix, Arizona

Redfin found that the number of homes sold in Phoenix dropped by 9% year-over-year, with the average days on the market increasing by 4 to 46. As the number of homes with price drops increases from 8.7% to 36.3%, you might want to avoid the Phoenix home market in the coming years.

Los Angeles, California

Nearly 21% of homebuyers in Los Angeles are looking to move elsewhere. Could it be that the average cost of living in Los Angeles is 50% higher than the national average? How about that home prices were up 10.9% compared to 2023? Redfin’s data indicates that the Los Angeles housing market can’t stay on top forever, with a looming crash.

Sarasota, Florida

According to Redfin , Sarasota homebuyers are fleeing the area, as 36% of homebuyers are looking elsewhere. The days on the market increased an astounding 36 days year-over-year to 71, indicating turbulent housing market conditions ahead.

The Bottom Line

Avoiding these ten places can help you preserve your housing investment and purchase in an area with appreciation potential.

This article originally appeared on GOBankingRates.com : 10 Housing Markets That Will Plummet in Value Over the Next 5 Years