Local markets is a HousingWire magazine feature spotlighting housing trends across the country.
Phoenix, Arizona
Phoenix has arguably been one of the hottest housing markets in the country over the past two years, but as mortgage rates have climbed, demand has cooled and inventory has risen dramatically. At some points during the summer, the active listing count for the Phoenix-Mesa-Scottsdale metro area topped 10,000, according to data from St. Louis Fed.
“Inventory is rising, and days on market is also a bit longer, but we still have a significant turnover of existing product,” Bob Nathan, a local Engels & Völkers agent, said. “It is not a crazy hot market anymore, it is now just a very strong market, but there are less concessions being given up by the buyer. So it is a little bit more back toward normal.”
However, as mortgage rates continue to rise, home-buying demand cools further and concerns about a possible recession become more prevalent. Accordingly, Phoenix is feeling the pain. The city ranked No. 8 in a Redfin analysis of metro areas most likely to feel a big impact as these gloomy economic scenarios materialize.
Lafayette, California
Just 25 miles east of San Francisco, Lafayette, California, is known for its high quality of life, top-rated schools, low crime rate and some of the highest home prices in the country. In June, the median sales price for a home in Lafayette came in at $2.065 million, according to Redfin.
Despite the steep home prices, home-buying competition was intense in Lafayette until mortgage rates began to rise.
“We have gone from so many offers on homes and not a lot of inventory to a slightly sleepier environment as people pause and figure out lending and what they can now afford with the decline in the stock market and rising interest rates,” said local agent Dana Green, team leader of the Compass-based Dana Green Team.
For sellers, Green said this change means having to alter pricing strategies and being a bit more modest with list prices. However, she noted that this shift did not come as a surprise.
“We all saw it coming based off of the number that came out Q1 this year,” she said. “We were at such an unbelievable high, and it obviously can’t stay that way forever. It is hard to know what a normal market looks like anymore. We went from a normal but strong market to the COVID market and now this sudden shift, so we are still trying to figure out what our new normal is.”
Vancouver, British Columbia, Canada
With easy access to the Pacific Ocean, great skiing and a milder climate than other parts of the country, it is a wonder everyone doesn’t live in Vancouver, British Columbia. During the height of the pandemic, when many people looked to get out of cramped cities, the housing market in Vancouver got a boost from homebuyers from other parts of the country who decided to take advantage of remote work opportunities and relocate.
But over the past few months, local eXp Realty agent Sarah Kwan has noticed a shift in the market. “There are definitely a lot more price reductions,” she said. “I first noticed the drop in March because I had a townhome listing and the week prior there was another unit that was virtually the same and it had twice as much foot traffic as we had.”
According to Kwan, prices have dropped an average of 2% month over month, but in some markets, she has seen prices drop 10% month over month. Despite these drops, she said that if a property shows well and is priced strategically, it will still generate plenty of interest and possibly even a multiple-offer situation.
“In markets where we have seen large price drops in the past 30 days, it is very important that you are looking at sold inventory on a weekly basis and maintaining communication with your clients so you can make changes if you need to.”
Kwan said she doesn’t confirm the final list price until right before the home is listed. Looking ahead, Kwan expects the market to continue to slow down. “It was expected regardless of interest rates. It was kind of bound to happen. There is only so long it can keep going up,” she said.
Huntsville, Alabama
Huntsville, Alabama, is perhaps best known as the birthplace of the Saturn V rocket that would one day send Neil Armstrong and Buzz Aldrin to the moon. However, it wasn’t always a bustling metropolis for the military technologies and aerospace industries. The city’s initial growth is attributed to the cotton industry and trade associated with railroad industries.
“We have always been known for great white-collar jobs, but we just didn’t have anything to fill the gap,” said John Brooks, a local agent with Coldwell Banker of the Valley. The opening of an Amazon distribution center and the addition of a second Toyota plant, among other things, have changed the situation.
The abundance of job opportunities combined with Huntsville’s strong public school system and growing arts and culture scene have made the city a place many wish to call home.
“We are usually ranked as one of the best places to live, and with this latest huge migration, a lot of people decided to move here, which gave us a bustling real estate market,” Brooks said.
Like elsewhere in the country, high levels of housing demand resulted in rapidly rising home prices and low inventory, but as interest rates have risen and fewer people are looking to make cross-country moves, Brooks said things have slowed down.
“I think Huntsville will still see some relocations probably into next year, and I think that is going to help our local market stay balanced,” he said. “We have definitely started getting more inventory, which is a healthy thing because it is not sustainable for everyone to continue to go up $40,000 over list price on every single home.”
Boston, Massachusetts
Founded in 1630, Boston is one of the oldest cities in the U.S. In its centuries of existence, the city and its housing market have seen a lot. As one might expect, despite its high home prices, the metro’s housing market is pretty hearty. In July, Redfin named the city as one of the metro areas with the lowest chance of a housing downturn if the U.S. entered a recession.
“We are seeing pockets of high activity, but prices are super stable,” said Ricardo Rodriguez, a Boston-based Coldwell Banker agent. Rodriguez attributes at least some of Boston’s resilience to the metro’s limited inventory and constant stream of demand, thanks to the various industries that call the city home.
But while other markets across the country are dealing with shifting conditions and changing trends, Rodriguez said he has noticed a new home-buying trend in Boston.
“Our buyers are younger than they used to be,” he said. “I think during the pandemic, a lot of people passed along financial resources to their children earlier than they would have because I am seeing more young people engage in the home-buying process than I have in my 20 years in the industry.”
