The U.S. housing market is constantly shifting, with some areas experiencing growth while others face a decline. As 2025 approaches, several experts have predicted that certain declining housing markets will see a significant drop in home values. Understanding which regions are expected to experience these changes can help both buyers and sellers make informed decisions. In this article, we’ll explore the declining housing markets that are poised to lose value in the near future.
Factors Behind Declining Housing Markets
The real estate market is influenced by several key factors, including buyer demand, the supply of homes, mortgage interest rates, and economic conditions. In some cases, an oversupply of new homes or high interest rates can lead to a cooling housing market. As Levi Rodgers, a real estate broker, noted, “affordability is becoming a serious concern” in certain areas. As a result, we’re seeing a shift in home prices in these regions, particularly in markets like Texas, which have seen rapid growth in recent years.
Texas: A Hotbed of Declining Home Values
Texas is one of the states that stands out when discussing declining housing markets. Cities like Dallas, San Antonio, and Austin have been identified as places where home values are likely to drop before the end of 2025. According to a recent report on Yahoo Finance, median home prices in Dallas have already declined by 2.3% year-over-year, with homes sitting on the market for an average of 42 days.
In San Antonio, the market is cooling due to an oversupply of homes, with a 2.7% decrease in median home prices year-over-year. Levi Rodgers explained that the surge of new home construction has led to supply outpacing demand, which is why home values in the area are expected to continue falling.
Austin, a city that experienced a housing boom during the pandemic, is also feeling the effects of a declining housing market. With a median home price of $548,000 and properties staying on the market for over two months, the city is starting to stabilize after years of rapid growth. Rodgers predicts further price declines as high interest rates persist and new developments continue to rise.
Phoenix and Boise: Mixed Signals in a Changing Market
Outside of Texas, other markets are showing signs of a downturn. Phoenix, for example, saw home prices rise during the pandemic, but now faces a potential decline as demand slows and inventory increases. According to Sergio Aguinaga, a real estate investor, Phoenix could experience a price drop as fewer buyers enter the market.
Similarly, Boise, Idaho, has seen rapid growth in recent years but is also on the list of declining housing markets. While median home prices have risen by 3.2% year-over-year, high interest rates are expected to limit the number of buyers, leading to a possible decline in home values before the end of 2025.
Other Markets to Watch for Declining Values
Aside from Texas, Phoenix, and Boise, experts also highlight several other areas where housing markets might see a decline. Florida, California, and Washington are notable states where home prices are predicted to drop due to a variety of factors, including oversupply, rising insurance costs, and economic shifts.
For instance, Florida could see falling home prices because of increased building activity, while California may face declines due to its high tax rates and an exodus of residents taking advantage of remote work opportunities. Washington, similarly, could see a dip in home values due to economic and demographic changes.
As we move toward 2025, it’s clear that several housing markets across the U.S. are at risk of losing value. Declining housing markets in states like Texas, Arizona, Idaho, Florida, and California are being driven by factors such as oversupply, affordability concerns, and high interest rates. For buyers, this could present an opportunity to purchase homes at lower prices, while sellers may need to adjust their strategies to avoid significant losses. Keep an eye on these markets as the real estate landscape continues to evolve.
Source: Yahoo Finance – “5 Housing Markets That Will Plummet in Value Before the End of 2025.”
