Pandemic Boomtowns Are Now Leading The Housing Price Drop

The towns that ran the hardest in the pandemic are now falling the furthest. Austin home prices are down nearly 28% from their 2022 peak, and Punta Gorda is down more than 25%.

The places that boomed are the ones leading the bust.

Where Prices Have Dropped The Most

There are 15 housing markets out of the 300 biggest in the U.S. where prices have fallen at least 10% from their 2022 peak. That is per a new look from ResiClub at the Zillow Home Value Index.

The list reads like a roll call of pandemic hot spots:

• Austin, TX: down 27.8%
• Punta Gorda, FL: down 25.4%
• Cape Coral-Fort Myers, FL: down 18.9%
• North Port-Sarasota-Bradenton, FL: down 17.5%
• New Orleans, LA: down 13.8%

Phoenix, Denver, San Francisco, Dallas, San Antonio, Boulder, Boise, Naples, Houma, and Lake Charles fill out the rest of the top 15.

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The Pattern Behind The Drop

Most of these metros sit in the South or Mountain West. They were also the big winners of the work-from-home wave.

Cheap money and free moves pushed buyers in, and prices ran way past what local pay could cover.

Now that the move-in wave has slowed and mortgage rates stay high, those metros can't lean on out-of-towners. They are back to leaning on local pay, which has not kept up.

Builders made the cool-down worse. The Sun Belt has a lot of new homes, and builders are cutting prices to move stock - which pulls buyers away from older homes too.

Northeast and Midwest metros never saw the same boom, so they are holding firmer now.

Some pockets are firming up, too. ResiClub flags that home prices in New Orleans are now up 2.1% year over year, even as the metro stays well below its 2022 peak.

The Wage-Price Gap

Wages have done what home prices have not. U.S. home prices are up just 2.2% from their June 2022 peak, while weekly worker pay is up 14.7% over the same span.

That gap is doing the work a price crash would do. A home that was too pricey in 2022 now fits a paycheck that has grown by double digits.

In plain terms, the math is catching up - just not the way most people thought it would.

The 2022 run-up was extreme to begin with. U.S. home prices in June 2022 sat 43.2% above March 2020 levels. Some metros ran even hotter. Naples, Austin, and Punta Gorda all gained more than 70% in that short stretch.

What To Watch

Florida and Texas are where the math is shifting fastest. Four of the top 15 markets sit in Florida, and three are in Texas.

As home prices fall back in line with what local pay can cover, the risk of a deeper drop fades too.

The peak is still the peak. But the floor is starting to firm up in spots.

That is the quiet upside hiding inside a story that mostly sounds bad.

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