Tale of two countries: Home prices rise in one half of U.S., fall in the other
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Real estate prices are all about "location, location, location," and right now that's particularly true — in half the country home prices are still going up, and in the other half they're falling.
Why it matters: The price data shows that the housing story is more complicated than affordability and still-high mortgage rates, which have cratered demand nationwide. Zoning laws, climate risks and economic vibes also play a big role.
- Ultimately, this tale of two housing markets is all about supply. In the places facing shortages of available homes, and less newly constructed housing, prices are holding up.
Zoom in: But areas in the South, particularly Texas and Florida, that had lots of new construction over the past few years, are seeing prices fall.
- And it's not just new homes; existing homeowners in these regions are also looking to sell and leave behind higher insurance costs, and climate risks.
- "In places like Florida and Texas, they're kind of tired of hurricanes," says Chen Zhao, head of economic research at Redfin. These folks are putting their homes on the market.
- These are also places where folks have second homes, she says. And you're seeing more people let those go, too.
By the numbers: The price of the typical home was down nearly 6% in the Tampa metro area this June.
- It fell 3% in the Jacksonville metro, and 6% in Austin.
- The Sun Belt, long a popular spot for home builders, is also seeing declining prices -- they fell 4% in the Phoenix metro area.
Meanwhile: In the Midwest and Northeast, the price of a typical home keeps rising. Home prices are up 4% in the New York City metro area from last June, 3% in Chicago and 2% in Minneapolis.
- These are regions where building new construction is much more difficult, due to zoning restrictions and lack of space.
Between the lines: "There's just this huge difference in supply between the Northeast and the South," Zhao says. "It's so much easier to do construction in the South. So you have a lot more new construction."
- New houses come to market a lot faster — whereas an existing homeowner can hold off on selling, and wait out the slow market, a homebuilder cannot.
- Instead, builders have to put homes on the market — and be willing to take a lower price.
"It's almost as if America is two countries right now from a housing perspective," said Atlantic writer Derek Thompson, who drew attention to the dichotomy in a recent episode of his podcast.
Reality check: Even if prices are down near you, they're still probably higher than they were in 2019, before a homebuying frenzy sent prices soaring.
- Typical home values nationwide sit roughly 46% above pre-pandemic levels, per Zillow.
What we're watching: Mid-size metros in the Midwest and Northeast were just named the summer's top housing markets by the Wall Street Journal and Realtor.com, in part for their affordability and "climate resiliency."
