A bizarre geographic split has emerged in the embattled US housing market – with home prices plunging across markets in the western half of the country even as they rise in the eastern half.
All 12 major housing markets located west of Texas, as well as in the city of Austin, when posted year-over-year price declines in January, according to data from mortgage analytics firm Black Knight cited by the Wall Street Journal on Monday.
The trend reversed in all 37 of the biggest markets located east of Denver, Colorado, excluding Austin.
Each of those markets posted year-over-year price hikes in January, even as soaring mortgage rates and poor affordability put a damper on buying activity.
“We’ve never seen anything quite like this where it’s so stark, west to east,” Andy Walden, Black Knight’s vice president of enterprise research strategy, told the outlet in an interview.
US home prices have come under pressure over the last year as mortgage rates rise in response to the Federal Reserve’s interest rate hikes.
The average 30-year fixed-rate mortgage was 6.42% last week – an increase of 2% compared to one year ago, according to Freddie Mac data.
Some of the sharpest price declines occurred in West Coast tech hubs that boomed during the COVID-19 pandemic.
Those markets are contending with an economic slowdown, a wave of layoffs and pre-existing affordability challenges in the form of sky-high home prices.
Home prices fell more than 10% year-over-year in San Francisco and San Jose, according to the data.
In Seattle, prices sank by 7.5%.
Meanwhile, the largest price increases in the eastern half of the US occurred in Florida, which has welcomed a steady stream of homebuyers and relocating companies over the last few years.
Prices surged by 12% in the Miami housing market and by 9.3% in Orlando, according to Black Knight’s data. Buffalo, New York as another winner, with prices ticking 8.3% higher.
Economists have warned for months that the run-up in mortgage rates will likely cause a sharp decline in home prices this year.
In February, overall US home prices posted a year-over-year decline for the first time since 2012 – snapping a record streak of 131 consecutive months of gains.
The median sale price for previously-owned US homes sank to $363,000 in February, the National Association of Realtors said in a release earlier this month.
That was a decrease of 0.2% compared to the same month one year earlier, when the median price was $363,000.
Experts at real estate firm Redfin say the recent turmoil in the banking sector could lead to more trouble in the “pandemic boomtowns” where price declines have been at their sharpest.
“Some buyers are canceling their contracts or bowing out of their home search because they work in tech and they’re worried about losing their jobs,” Bay Area Redfin manager Shelley Rocha said in a statement earlier this month.
“The surge in tech layoffs was already causing jitters, and now the bank failures are adding to buyers’ nerves.”
