Hot real estate markets starting to cool: Redfin

Yahoo Finance housing reporter Rebecca Chen breaks down the state of real estate markets in the U.S., as well as how the current housing market compares to pre-pandemic levels.

Video Transcript


- Many cities across the country, some homes are selling for tens of thousands of dollars less, sometimes even hundreds of thousands of dollars less than they were just a year ago. Here to explain, Yahoo Finance housing reporter, Rebecca Chen. Rebecca, so what's going on? Where are we seeing this? And what's causing it?

REBECCA CHEN: So the numbers that we're seeing show that some of the San Francisco housing are $220,000 less than just a year ago and this is per house. Experts we previously chatted with say, it's because buyers are just not as aggressive in the market. There's not as much wealth in the tech ecosystem. So there's not that much IPO going on, the VC funding has really dried up and because of the tech layoffs. And also, we are seeing that pandemic boomtown prices are really coming down.

So Austin, Texas, Boise, Idaho, prices are dropping in these places as well. And Austin saw a 15% decline this year. It's about $85,000 less compared to last year per house in Boise, and this is really the market where in the last two years, market went crazy over. It's skyrocketed over 40% in just one year. And in Boise, Idaho we're also seeing similar things where it's a 15% drop, and that's about $80,000 less in a house compared to last year.

- How does this all compare to where things were pre-pandemic?

REBECCA CHEN: So before a pandemic, prices weren't as high obviously. And for Austin, prices are still relatively elevated compared to pre-pandemic. Based on our calculation, average price is about still 50% higher than 2019. But on the other hand, San Francisco is seeing a little bit more coming back down. So based on our calculation, San Francisco right now sits about within 4% of price difference compared to pre-pandemic levels.

- Rebecca, that pressure that we're seeing already on housing prices, is that expected to continue?

REBECCA CHEN: That's a-- it's a yes or a no question answer. And it's because in addition to the macroeconomic factors, we are also seeing a lot of factors affecting these local markets. So for Austin, the supply has really changed, because there are more newer constructions coming online, and there are a lot more listings compared to the rest of the housing-- rest of the housing market. And on the other side, demand has really dropped for Austin. Two years ago, everybody, somebody you know was moving to Austin.

But this year, we actually saw a negative population growth at the end of 20-- at the end of last year. So we think because of supply and demand price is easing up a lot in these markets. But as for San Francisco, because it's such a technology-heavy industry, we're really not sure where it will go next, because technology firms could bounce back any second, as we know. But we do know that because of the working from home. Narrative has changed for the city going forward.

- It certainly has changed for a number of cities. Rebecca Chen, good job. Thanks so much.