So, this historic decline in housing affordability must have driven home prices down over the past year, right?
It is a mixed bag.
Among the 400 largest metropolitan housing markets tracked by the seasonally adjusted Zillow Home Value Index, 174 markets were below their pandemic peak for local home prices in April. Another 226 markets were either back to their post-pandemic peak, or had completely recovered from their higher peak in April.
Western markets like Boise and San Francisco have seen local home prices decline 10% from their 2022 peak, while markets like Miami and Cincinnati set new all-time highs for local home prices in April.
Real estate is local, though, and this bifurcated – and downright weird – housing market really takes it to the extreme.
“The wild pandemic-era housing market has made the trend of price increases more localized since 2009,” Taylor Marr, deputy chief economist at Redfin, wrote in a report published this week. “The historic price-growth gap between San Francisco and Miami shows how the housing market remains local, with the Bay Area losing homebuyers and South Florida attracting them.”
This bifurcated market, Marr says, “means it’s more important than ever to focus on local trends.”
Why is the housing market so divided over the past year?
One reason is that the Western housing market is more sensitive to rates. First, Western markets have been pressured by affordability after years of rising home prices, leaving them vulnerable to acute affordability stress whenever mortgage rates rise. Second, those Western markets have a high concentration of tech jobs, which tend to be vulnerable whenever the Fed goes into anti-inflationary mode.
“The fact that Miami’s prices are holding up well despite the national pullback in homebuying suggests that Florida’s relative popularity is here to stay. Even though few workers are in offices at least a few days a week, may be returning, but the pandemic has given many Americans a lot.” More freedom in where they choose to live — and a lot of them are choosing locations where spending $1.5 million for a run-of-the-mill home isn’t ideal,” Marr wrote.
To better understand this bifurcated housing market, Luck 11 state-level maps created using seasonally adjusted Zillow Home Value Index data. These maps show how home prices compared at the peak of the pandemic in April 2023 at the zip code level. If a particular zip code is shaded blue, it means local home prices were at an all-time high in April 2023.
Of the 1,564 California ZIP codes tracked by Zillow, 98.5% are below their pandemic peak for local home prices; 1.5% of California zip codes were at their peak in April.
Of the 1,554 Texas zip codes tracked by Zillow, 69.6% are below their pandemic peak for local home prices, while 30.4% of Texas zip codes were at their pandemic peak prices in April.
Of the 927 Florida zip codes tracked by Zillow, 76.2% are below their pandemic peak for local home prices, while 23.8% of Florida zip codes were at their pandemic peak prices in April.
46% of the 1,038 Ohio zip codes tracked by Zillow are below their pandemic peak for local home prices; 54% of Ohio’s zip codes were at their epidemic peak value in April.
Of the 722 North Carolina zip codes tracked by Zillow, 38.8% are below their pandemic peak for local home prices, while 61.2% of North Carolina zip codes were at their pandemic peak prices in April.
Of the 303 Arizona ZIP codes tracked by Zillow, 90.1% are below their pandemic peak for local home prices, while 9.9% of Arizona ZIP codes were at their pandemic peak in April.
Of the 782 Missouri ZIP codes tracked by Zillow, 30.4% are below their pandemic peak for local home prices; 69.6% of Missouri zip codes were at their epidemic peak value in April.
Of the 424 Maryland zip codes tracked by Zillow, 46% are below their pandemic peak for local home prices, while 54% of Maryland zip codes were at their pandemic peak prices in April.
Of the 259 Connecticut ZIP codes tracked by Zillow, 25.1% are below their pandemic peak for local home prices, while 74.9% of Connecticut ZIP codes were at their pandemic peak prices in April.
One of 22 District of Columbia ZIP codes tracked by Zillow is below its pandemic peak for local home prices, while 21 District of Columbia ZIP codes were at their pandemic peak prices in April.
Of the 230 Vermont ZIP codes tracked by Zillow, 13.5% were below their pandemic peak for local home prices, while 86.5% of Vermont ZIP codes were at their peak for local home prices in April.
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