10 real estate markets whose values ​​will collapse in the next 5 years

Looking to buy real estate? Whether you’re a seasoned investor looking for your next purchase or a soon-to-be retiree trying to find a stable home out of state, it’s important to understand where the market is headed. In this article, we’ll cover ten real estate markets that are likely to see a steep drop in values ​​over the next five years and help you make an informed buying decision.

And while you’re at it, you might also be interested in the 20 cheapest cities.

According to real estate agents: The 7 worst states for buying real estate in the next 5 years

Also: Become a real estate investor for just $1,000 with this Bezos-backed startup

Wealthy people know the best money secrets. Learn how to copy them.

San Francisco, California

The Bay Area has long attracted residents; however, the real estate market appears to be struggling. For one thing, major department stores like Macy’s and Nordstrom are pulling out of the area. In addition, sellers are having trouble closing deals at list price. A two-bedroom condo is selling for $675,000 in April 2024 after being purchased for $1.25 million in 2019.

“This tech hotspot (San Francisco) is thriving,” says Yosef Adde, founder of I BUY Los Angeles. “I feel like we’re about to get a reality check. As remote work becomes more common, many people are moving away because of the high costs. It’s like we’re witnessing a gold rush. The median home price has already fallen 8.2% year-over-year. I believe this decline will continue.”

Read: The 5 worst cities in California to buy property in the next 5 years, according to real estate agents

Austin, Texas

If you’re considering a move to Texas, avoid buying in Austin. Redfin found that home prices in this area are 28% higher than the national average. In addition, 39.8% of homes have seen their prices drop and 11% fewer homes have been sold compared to last year. These factors point to a slowdown in the coming years.

“Austin is another market that gives me pause,” says Adde. “It was popular with real estate investors, but I fear it has fallen victim to its success. The influx of technology companies and employees has driven prices to a level where it feels like watching a balloon being overinflated – at some point it will burst. With real estate prices up 32% in the last two years, a correction seems inevitable.”

The story goes on

New York City, New York

Did you know that 31% of New York City home buyers began their search outside of the city limits? Redfin data shows that the average time New York City homes are on the market is a whopping 65 days. Additionally, the number of homes sold is down 4.6% year over year. It may be worth expanding your search to a neighboring metropolitan area to protect your investment.

Denver, Colorado

According to Redfin, the Denver area is also experiencing a housing market slowdown, with 45.2% of homes dropping in price. Although homes are selling quickly, sales prices are falling, indicating a declining housing market.

Miami, Florida

If the nightlife appeals to you, you may have already started looking at homes in Miami. But before you make an offer, know that Redfin found that the average time on the market is 80 days. The number of homes sold is down 8.1% year-over-year, and the cost of living in Miami is 18% higher than the national average. These points point to a market downturn in the near future.

San Antonio, Texas

Like many other cities on our list, San Antonio is seeing a 10.8% year-over-year decline in homes sold. Likewise, the average number of days a home is on the market increased 12 days year-over-year, to 47, according to Redfin. That means that if you buy a home in San Antonio, you may have a hard time selling it for a profit in a few years.

Seattle, Washington

According to data from Redfin, the cost of living in Seattle is currently 45% higher than the national average. Combined with 30.1% of homes dropping in price, Seattle’s real estate market will experience a decline over the next five years.

Phoenix, Arizona

Redfin found that the number of homes sold in Phoenix decreased by 9% compared to last year, while the average time a home is on the market increased by 4 to 46. With the number of homes seeing price declines increasing from 8.7% to 36.3%, you may want to avoid the Phoenix housing market in the coming years.

Los Angeles, California

Nearly 21% of Los Angeles homebuyers are looking to move elsewhere. Could it be that the average cost of living in Los Angeles is 50% higher than the national average? Or that home prices have increased 10.9% compared to 2023? Redfin’s data suggests that the Los Angeles real estate market can’t stay at the top forever, as a crash is looming.

Sarasota, Florida

According to Redfin, Sarasota homebuyers are leaving the area, with 36% of buyers looking elsewhere. The number of days a home sits on the market increased a staggering 36 days year-over-year, to 71, indicating turbulent conditions in the real estate market.

The conclusion

By avoiding these ten locations, you can protect your real estate investment and buy in an area with potential for appreciation.

More from GOBankingRates

This article originally appeared on GOBankingRates.com: 10 Real Estate Markets That Will Drop in Value Over the Next 5 Years