3 Housing Markets That Will Have Massive Price Drops in Early 2025
Written by
Daria Uhlig
Edited by
Zuri Anderson
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The housing market has cooled off since the pandemic drove demand for homes to levels far beyond what inventory could meet. While prices are still rising slowing in much of the country, they’re already falling in some markets, and other markets are likely to see declines.
In its recent housing market forecast for 2025, based on growth forecasts from October 2024 to October 2025, Zillow identified three metropolitan markets where prices are expected to decline the most this year.
Also find out the best places to buy a home if you want it to gain value.
New Orleans
- Median sale price: $290,833
- One-year change in average value: -4.6%
- Predicted price decline in 2025: 3.8%
New Orleans tops Zillow’s list of metros where prices are poised to fall. As of December 2024, prices were up 6.8% and the number of homes sold grew by 5.9% compared to the previous year, according to Redfin data.
Homes are also selling faster than last year. However, the number of homes with price drops grew nearly 7% in 2024, and slightly fewer homes are selling for more than list price. More importantly, average home values are down a significant 4.6%. That could signal a market shift more favorable to buyers.
San Francisco
- Median sale price: $1,367,667
- One-year change in average value: +1.4%
- Predicted price decline in 2025: 2.3%
Zillow predicts that San Francisco housing prices will drop by 2.3% this year. Median listing prices had already fallen 10.9% year over year as of December 2024, according to Realtor.com’s December 2024 Monthly Housing Market Trends Report.
But data from Redfin shows that more are selling above list price compared to a year ago, even as this market sees more homes with price drops. That suggests sellers’ expectations are aligning better with the realities of what was an overheated market. It’s just a matter of time before buyers catch up.
Austin, Texas
- Median sale price: $555,833
- One-year change in average value: -3.8%
- Predicted price decline: 0.04%
The Austin real estate market saw massive gains in 2020 through 2022. And as of Nov. 30, 2024, home prices were still inching up, despite a 3.8% one-year decline in value, per the Zillow Home Value Index.
And while the number of sales is also up, so is the number of days on market, which means homes are taking longer to sell. Redfin rates the level of competition for homes a 25 out of 100, which equates to a “Not Very Competitive” Redfin Compete Score. Low competition means low demand, which naturally drives prices down.
5 More Real Estate Markets Likely To See Declines
Five additional markets have a “very high” probability of price drops based on the CoreLogic Market Risk Indicator, which measures the “overall health” of U.S. housing markets.
- Prove-Orem, Utah
- Albuquerque, New Mexico
- Tucson, Arizona
- Phoenix-Mesa-Scottsdale, Arizona
- Punta Gorda, Florida
Each of these markets has a more than 70% probability of a decline, according to CoreLogic’s analysis. The analysis has a 50% to 75% confidence score.
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