3 Midwest Housing Markets That Have Plummeted in Value Over the Past 5 Years
Written by
Heather Altamirano
Edited by
Zuri Anderson
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Real estate has seen some unusual trends over the last few years. From soaring home prices to low inventory, high demand and skyrocketing interest rates, several variables have impacted the housing market.
Rates are slowly coming down and hovering around 6.6% for a 30-year fixed loan, according to U.S. Bank, but some markets haven’t been able to keep up with the fast-moving changes and are declining in value, especially in the Midwest.
While the region is experiencing strong home prices, data from John Burns Research & Consulting shows low inventory is causing costs to increase. In addition, slow job growth is an issue for some areas in the Midwest leading to a drop in value.
“Having worked in the industry since 2007 — including through the crash, the recovery, and the recent market volatility — I’ve seen firsthand how cities rise and fall in value,” explained Yawar Charlie, director of estates at Christie’s International Real Estate of Southern California. “While some Midwest markets have remained resilient, others have taken a noticeable hit over the past five years.”
Here are three Midwest markets that have seen a significant decline, why values are dropping, and whether buying in these areas is a smart move, per Charlie.
Peoria, Illinois
Known for its beautiful waterfront, cultural history and stunning views, Peoria is a striking small town that offers plenty of good restaurants and outdoor activities, but Charlie warns to look carefully at the local economy.
“Home values in Peoria have dropped 5 to 10%, with some areas struggling more than others,” he stated. “A combination of job losses in manufacturing and healthcare, plus high property taxes, has made it tough for home values to hold steady. The demand simply isn’t there in the way it used to be. “
Is it a good buy?
“If you’re looking for affordability, Peoria delivers. But long-term appreciation? That’s a much bigger gamble,” Charlie advised. “Unless you’re getting a great deal in a high-demand rental area, tread carefully.”
Rockford, Illinois
Rockford is one of the biggest cities in the state, but according to Charlie, “Home prices have dropped 6 to 8%, particularly in areas with higher crime rates.” Homicides were up 33% in 2023 and domestic violent crimes have increased, per a local WREX report.
“Economic stagnation and crime concerns have made it difficult for Rockford to attract new buyers,” Charlie explained. “While the city has been working on revitalization, progress has been slow.”
Is it a good buy?
“Investors seeking rental income might find solid returns, but appreciation remains questionable,” the expert stated. “If you’re looking for long-term value, other markets may offer more stability.”
Saginaw, Michigan
Michigan is experiencing a major housing crisis. According to a local report by News Channel 3, the state is short at least 140,000 units and the price to buy new homes is rising dramatically, as are rental properties.
“Some areas have seen values dip 8 to 12%, a reflection of the area’s continued economic challenges,” Charlie explained. “The decline in auto manufacturing jobs has taken a lasting toll. With fewer job opportunities and a shrinking population, demand for housing has remained weak.”
Is it a good buy?
“Only if you’re playing the long game,” per Charlie. “If Saginaw sees new investment and economic growth, property values could rise — but right now, there’s no quick turnaround in sight.”
The Bottom Line
There’s many affordable housing markets in the Midwest, but that doesn’t always mean they’re valuable. While struggling cities can turn around in economic shifts, not every deal is worthy.
“If you’re looking for short-term appreciation, these may not be your best bets,” according to Charlie. “But if you’re an investor willing to ride out the cycle, or you’re looking for affordable housing with potential, some of these markets could be worth a second look.”
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