America's housing affordability crisis has shackled would-be buyers for several years, but some relief may be on the horizon. A recent profile of the housing market by Newsweek shows that home values have declined in 27 out of 50 states since January. Newsweek cited a Zillow housing report, which recorded the largest monthly declines between March and April.
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Housing market observers speculate that this downward movement in home values could signal a nationwide tilt toward a buyer's market. The markets with the largest declines in value were:
- Colorado
- Washington, D.C.
- California
- Florida
- Washington
- Arizona
- Louisiana
- Texas
- Georgia
Florida home values are down by 0.55% statewide, making it the biggest loser in terms of home values. That's quite a 180-degree turn because Florida's real estate market was booming as recently as 2023. Buyers flocked to the state during and after the pandemic, which made Florida one of the country's hottest real estate markets.
The buying boom resulted in a price spike, but buyers didn't necessarily feel its effects until the Fed began raising interest rates to curtail inflation. Unfortunately for many would-be buyers, and sellers too, the run-up in interest rates coincided with an insurance crisis that saw premiums and deductibles skyrocket. The high interest rates and finance costs are a perfect recipe for cooling off the housing market.
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Nick Gerli, CEO of the Reventure real estate app, is particularly bearish on Florida real estate. "I don’t think people understand what’s happening in the housing market right now," Gerli posted on X, "Florida now has 177,00 listings. Highest level on record. Entire Northeast U.S. has 79,000 listings. Lowest level on record. People are leaving Florida. And moving back north."
He also described it as "A structural trend that will likely last years, and cause Florida’s housing market to decline for an extended period." Florida is not alone in dealing with a housing slowdown brought about by high financing and insurance costs. California and Texas residents have been grappling with those same issues, which probably explains their presence on the list of states with the largest declines in home value.
"It is a bad combination of factors that are causing housing values to trend downward, even if we have yet to see that impact in home sale values and declining interest rates," said Alex Beene, who teaches financial literacy at the University of Tennessee at Martin. Gerli believes the downward trend indicates a market shift that could be widespread and long-lasting.
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"I think this data holds key implications for housing market analysts, homebuyers, and investors in 2025," Gerli wrote in another X post. "The question isn’t becoming “if” prices will drop. But rather: where the drops are occurring. And by how much?" That will certainly come as a relief to buyers, but thus far, the declines haven't been big enough to spur a large-scale increase in purchasing activity.
"It is the cost of the homes that remains the issue, and prices need to correct to make it more affordable for new buyers," said 9i Capital Group CEO Kevin Thompson. "I expect prices to continue to fall while rates remain higher, reaching a level where buyers and sellers can come to a good price in the future," he told Newsweek. "The timing of that is still up in the air, but it will definitely happen as all markets tend to correct where demand and supply meet.”
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