Remember the housing boom in the middle of the COVID-19 pandemic? Between 2021 and 2022, many people moved to cities like Austin, Tampa, Phoenix and Atlanta for job opportunities, lifestyle or the weather.
Housing became extremely popular in these sunny places, and prices rose quickly. Boosted by record-low interest rates, buyers were competing fiercely to purchase homes. More than one buyer would bid for the same house, often offering more money than the listed price. Some buyers even paid entirely in cash to quickly secure a property.
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Today, those hot housing markets are cooling. Pandemic-era hot spots have seen sharp increases in active listings, while median prices have slipped, Business Insider reported.
Demand slowed in areas where people migrated during the pandemic, so homes are staying on the market longer and prices are declining. This is a reversal from the competitive booming market of 2021–2022.
Sellers feel pressure in the Sun Belt
The market has flipped as sellers are now stressed because they’re having trouble getting good offers. Sellers, particularly those in the Sun Belt, are feeling “desperate” to sell, Business Insider wrote.
In Denver, inventory is up nearly 50% from 2019, while Dallas inventory has risen more than 20%. Prices in Dallas and other Sun Belt markets declined slightly year over year. Net migration to Florida and Texas remains positive, but it is significantly lower than during the relocation surge, with Dallas adding 25,000 new residents, versus 91,000 a few years earlier, and Tampa adding 11,000, versus 54,000 during the boom.
Home sellers in once-hot Sun Belt markets have begun adjusting expectations to reality, lowering prices to attract buyers. Over 50% of homes reduced their prices, indicating a cooling market and a shift from a seller’s market to a more buyer-friendly one, the Business Insider report stated.
Midwest and Northeast markets gain strength
By contrast, housing markets in the Midwest and Northeast regions are now experiencing strong demand and rising prices. Inventory remains tight, prices are rising, and homes are selling faster than in many Sun Belt markets. Cities that drew little attention during the pandemic, such as Buffalo, Cleveland, Milwaukee and Detroit, are seeing sellers maintain strong bargaining power.
The shift is fueled by more than just supply. Changes in the labor market, migration patterns and affordability influenced where Americans are moving or whether they are moving at all. Many homeowners are reluctant to leave jobs or trade low mortgage rates for higher ones.
With these trends showing no immediate reversal, analysts suggest that the new housing-market leaders in the Midwest and Northeast could remain strong for years.
