7 Housing Markets Where Home Values Could Plummet Next Year

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After surging during the pandemic, real estate markets have floundered over the last two years.
High interest rates hit real estate from several directions: They make new loans far more expensive and have stifled supply through the “lock-in effect.” Would-be sellers feel chained to their homes, given their cheap fixed-interest mortgages — so they aren’t selling.
That one-two punch has led to the lowest home turnover rate in over 30 years, based on a 2024 analysis by Redfin.
Of the roughly 900 cities tracked by Zillow, 105 of them saw home prices drop over the last year. So which cities look poised to plummet over the next year?
Naples, Florida
- Median home price: $577,990 (Zillow)
- Year-over-year (YoY) change: -2.9%
Soaring insurance rates combine with an aging population to make Naples a prime suspect for further housing corrections.
“We’re also seeing people move away from places like Florida and South Carolina due to fear of extreme weather,” said Adam Hamilton, CEO of real estate accounting platform REI Hub. “The Sun Belt has actually done the best job of constructing new homes compared to the rest of the country, adding plenty of housing supply.”
Affordability is great for buyers, but not so great for sellers. Cities like Naples, which have catered to wealthy retirees, may need to reinvent themselves in the coming years to attract young families and working-age adults to keep the local economy — and housing market — healthy.
Dallas-Fort Worth, Texas
- Median home price: $299,130 (Fort Worth)
- YoY change: -0.7%
Nowhere has seen new housing supply added as fast as the combined Dallas and Fort Worth metropolitan area.
No, really: It has seen more new housing construction than anywhere else in the country, according to housing analytics firm Zonda.
Entering 2025, Hamilton sees plenty of opportunity for first-time homebuyers in cities like Dallas and Fort Worth.
“I see Sun Belt cities in the southern US as the most promising for buyers next year,” he said.
Miami, Florida
- Median home price: $584,467
- YoY change: 5.5%
Naples isn’t the only city in Florida at risk of sliding home values. Eric Brown, licensed real estate agent and founder of Empire 850, sees storm clouds on Florida’s horizon.
“During the pandemic, home prices soared, driven by remote work and migration. But wages didn’t keep up,” he said. “In Miami, the price to income ratio is among the highest in the state, making it tough for locals to keep up.”
When home values get too far out over the skis of local fundamentals like median incomes, it sets the stage for a correction.
Tampa, Florida
- Median home price: $375,818
- YoY change: 0.2%
“Beyond Miami, Tampa is also feeling the squeeze from affordability issues, rapid price growth, and shifting economic winds,” Brown continued.
“Tampa and Orlando have also been hot spots for out-of-state buyers and investors. That’s great when the market’s growing, but as interest rates rise and rents stabilize, that investor enthusiasm may slow, taking price appreciation down.”
In fact, Brown sees Florida’s real estate as increasingly a house of cards standing on a wobbly foundation.
“Population growth has fueled Florida’s housing markets over the last two decades, but higher mortgage rates are sidelining buyers,” he explained. “Couple that with an increase in new construction, especially in central Florida, and you might end up with more homes than buyers. This is a risky recipe if demand slows.”
Orlando, Florida
- Median home price: $380,216
- YoY change: 1.6%
Orlando suffers from the same fundamental risks as Tampa — plus one more.
“Orlando’s housing market is heavily tied to tourism,” Brown added. “If the economy slows and consumer spending and tourism dip, job stability in this area will take a hit, dragging housing demand with it.”
Washington, DC
- Median home price: $601,210
- YoY change: -2.6%
Tax dollars, the military industrial complex and government bureaucracies have hurtled DC’s housing markets into the stratosphere in recent decades. But what happens if President-Elect Trump makes good on his promises to cut spending, boost isolationism and decentralize the federal government?
Joey Gumataotao, co-founder and COO of real estate investing app mogul Club, sees vulnerability in the inflated DC housing market.
“We may see prices drop in places like Capitol Hill. In fact, we’re already starting to see decreases in some submarkets,” Gumataotato noted.
Denver, Colorado
- Median home price: $547,159
- YoY change: -1.5%
The Front Range of Colorado boomed in popularity in the aughts and teens, spurred by millennials seeking hiking-and-hipster culture. That wave may have already crashed, however.
“I see Denver as one of the markets with the highest risk of a correction,” said Brian Rudderow, real estate investor at HBR Colorado. “Housing prices have been overly inflated for several years, and there have only been slight pullbacks these past couple of years.
“I’ve spoken with a lot of sellers who can’t unload their homes, even cheaper condos near downtown at lower price points of around $200,000. The overall trend that I’m seeing is a gradual slowdown and shift into a buyer’s market, and I think this trend will continue into 2025 with a bigger price correction taking place around the holidays next year.”
High home prices have left many of today’s twentysomethings in Gen Z looking elsewhere for their starter homes. Ironically, that might just open the door of affordability in Denver and the rest of the Front Range, in the years to come.