"The housing market might be going strong or it could be in free fall. It all depends where you live.
“We are entering a new real estate market where prices, inventory and sales levels are back to being highly localized,” said Alex Vidal, brand president at ERA Real Estate, in an email. “During the pandemic, and soon after, we were able to make broad-brush statements about dwindling supply, booming buyer interest and increased prices. That is no longer true.”
Recent data from Zillow Group Inc. underscored what is becoming a growing divide between housing markets, showing that 53% of homes in America lost value in the past year — the most since 2012. That varies dramatically by region and city, though, with homes in the South and West the most likely to have lost value over the last year.
The cities with the highest percentage of homes to have lost value are:
- Denver: 90.6%
- Austin, Texas: 89.5%
- Sacramento, California: 87.5%
- Phoenix: 86.9%
- Dallas: 86.7%
- San Antonio: 86.3%
- Tampa, Florida: 85.2%
- Orlando: 85.2%
- San Francisco: 83%
- Jacksonville, Florida: 82.7%
On a regional basis, cities in the Northeast and Midwest posted lower percentages. Hartford, Connecticut, saw just 12.7% of its homes lose value over the last year. Other relatively low percentages are in Milwaukee (13.5%); Buffalo, New York (15.9%); Boston (20.7%); Cleveland (21.1%); and New York City (21.1%).
The factors that are driving the divide include some cities seeing an increase in inventory in part because of new-home development, Vidal said. But in many markets, home values have decreased as other costs have risen — such as homeowners insurance — as areas affected by hurricanes, flooding, wind and fire have struggled to keep insurers issuing policies.
There is a flip side to the Zillow data. While recent homebuyers might be negatively impacted by the lower home values over the past 12 months, the median homeowner has seen their home's value rise about 67% since it was purchased. Just 4.1% of homes have lost value since they were last sold.
"Homeowners may feel rattled when they see their Zestimate drop, and it's more common in today's cooler market environment than in recent years, but relatively few are selling at a loss," said Treh Manhertz, senior economic researcher at Zillow, in a statement with the company's findings. "Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we're seeing now is a normalization, not a crash."
Regional distinctions exist on this front as well. In San Francisco, 14.4% of homes on the market are priced below their last sale price. In Austin, Texas, that number is 12.6%. Texas, California and Florida dominate among markets where a significant number of homes for sale are priced below their last sale price.
Meanwhile, in Midwest cities such as Cincinnati and Milwaukee, the share of homes on the market priced below their last sale price was around just 1%, according to Zillow's research.
"Most communities have not seen such a balanced market in several years," Vidal said. "But we also should expect home prices to have slight variation in appreciation levels next year depending on the market."
The stark differences among local markets compared to a national real estate outlook is like looking at a national weather forecast versus a local one, said Patrick Roach, president of Southwestern Real Estate.
“There are some parts of the country, particularly in the Sunbelt, that have seen an increase of inventory as more and more companies return to in-office ... work, as well as higher insurance costs for natural-disaster prone areas,” Roach said in an email. “However, there are many parts of the country that are still very seller-friendly and prices are increasing.”
According to Zillow's research, homes in Austin, Texas, have seen the biggest decline in average value from their peak, sliding 20.5%. That's followed by New Orleans (down 15.9%), San Francisco (14.8%) and Pittsburgh (down 13.2%). Nationally, average value has declined 9.7% from its peak.
Jeff Lichtenstein, CEO and president of Echo Fine Properties in South Florida, said that in some places, price drops are even worse than they might appear on the surface. That's because inflation means prices in real terms have fallen more the top-line number.
“We are seeing lots of movement in our market right now, and that is because 'must sellers' who have been sitting a while and need to sell have found the bottom,” Lichtenstein said in an email.
Inventory is rising and lower interest rates will help buyers, he said, but new-construction prices are set by fixed input costs and don’t have the same pricing flexibility — which leads to a mixed picture in the year to come.
“While I see good activity coming for 2026 because of all of the points above, the tariffs and increased costs for food, clothing, health-property insurance, etc., is taking buyer power out of consumers," Lichtenstein said. "Still, that price drop is starting to make homes more affordable than other parts of the economy which have seen huge spikes in cost."
More homes are expected to hit the market in 2026, but don’t expect home prices to drop in the near future. A report by the National Association of Realtors predicts existing-home sales will jump by 14% in 2026. That’s because of a combination of dropping mortgage rates and improving market stability after several years. Prices, however, are projected to go up by 4% in 2026, as demand remains steady and supply remains lower than normal."
Source: Austin Business Journal
Written by: Andy Medici
Published: December 15, 2025
Posted by Grossman & Jones Group on
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