After staggering growth during the pandemic, the U.S. housing market is starting to cool — and it’s happening fastest along the West Coast.
The quickest-cooling real estate market is San Jose, California, according to a new Redfin analysis, which ranked U.S. metropolitan 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, with four other Western cities rounding out the list.
By comparison, Albany, New York, was the slowest-cooling housing market, followed by El Paso, Texas, and Bridgeport, Connecticut, Redfin’s analysis found.
One of the top reasons for cooling throughout the country is rising interest rates, which have triggered “the affordability factor,” said Melissa Cohn, regional vice president at William Raveis Mortgage.
Indeed, costlier areas, such as Northern California, where homes may easily sell for $1 million to $1.5 million or higher, have been harder hit by 30-year fixed mortgage rates approaching 6%, the report found.
For example, if you’re buying a million-dollar home with a 20% down payment, your monthly mortgage payment may be roughly $5,750 with a 6% interest rate, depending on taxes and homeowner’s insurance, which is $1,400 higher than with a 3% interest rate, according to the report.
10 fastest-cooling U.S. housing markets
Here are the U.S. markets that have cooled the most over the past year, according to Redfin, and their median sale price as of May 2022.
San Jose, California — $1,560,000
Sacramento, California — $610,000
Oakland, California — $1,070,000
Seattle, Washington — $850,000
Stockton, California — $576,000
Boise, Idaho — $550,000
Denver, Colorado — $612,000
San Diego, California — $875,000
Tacoma, Washington — $575,000
San Francisco, California — $1,620,000
10 slowest-cooling U.S. housing markets
Here are the U.S. markets that have been slowest to cool over the past year, according to Redfin, and their median sale price as of May 2022.
Albany, New York — $289,000
El Paso, Texas — $238,000
Bridgeport, Connecticut — $570,000
Lake County, Illinois — $324,400
Rochester, New York — $212,100
New Brunswick, New Jersey — $465,000
Cincinnati, Ohio — $265,000
Akron, Ohio — $200,000
New Haven, Connecticut — $310,000
Virginia Beach, Virginia — $325,000
‘Cooling’ doesn’t mean buyers will see price drops
While growth may be slowing in some markets, experts still aren’t expecting significant price drops in most markets.
“One of the reasons why we’ve had this frothy, overheated market is just lack of inventory,” Cohn said.
To that point, in Redfin’s analysis, some of the faster-cooling markets have seen more inventory come on the market. In Seattle, for example, inventory is up 40.9% from the prior year.
Home prices are still rising, albeit more slowly. The expectations for one-year median home price growth dropped to 4.4% from 5.8% in June, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations.
“The velocity of price increases will certainly diminish significantly,” Cohn said, predicting a “healthy normalization” of the real estate market.
One of the reasons why we’ve had this frothy, overheated market is just lack of inventory.
Melissa Cohn
regional vice president at William Raveis Mortgage
With many buyers paying cash over the past couple of years, some purchasers have waived appraisals, inspections or even seeing the home in person.
However, the market shift may offer buyers more time to see properties, make an offer and purchase the right home, Cohn said.
What cooling markets mean for homeowners
If you recently purchased a home, you may have concerns about the home’s future value, especially in a cooling market.
“The good news is that these buyers most likely got locked into a lower interest rate, so the payments should be more manageable than someone buying now,” said Matthew Chancey, a certified financial planner with CoastalOne in Tampa, Florida.
If you overbid on the property, you may be “underwater” in the short term, meaning you owe more on the mortgage than the home is worth, he said.
That’s not a situation you necessarily need to rush to remedy. Kyle Newell, an Orlando, Florida-based CFP and owner of Newell Wealth Management, said homeowners who are underwater should funnel extra cash into savings for emergencies, such as a possible job loss, rather than racing to pay down the mortgage.
Experts generally recommend setting aside three to six months of living expenses. But some advisors suggest more for added flexibility.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
