Home prices are expected to continue increasing nationwide in 2022. But these five markets show the conditions for price declines.
Rising prices have been a hallmark of the housing market for the better part of a decade.
In fact, year-over-year home prices have increased in each of the last 119 months – an outstanding record that began in December 2011 when Maroon 5’s “Moves Like Jagger” was on the Billboard Top 10.
Nationwide, home prices are expected to continue increasing in 2022. The exact rate at which they will increase depends on the location and who you ask. But data from CoreLogic shows that at least five metropolitan areas are poised for home price declines in the next 12 months.
Here are five housing markets to watch for price declines in 2022, in order of CoreLogic’s probability of price decline.
January 2022 median home sales price: $470,000*
Price change January 2021-January 2022: 30%
Probability of price decline in next 12 months: 70%
On the California-Arizona Border, the Lake Havasu City-Kingman metro area saw explosive price growth during the pandemic as remote workers sought out more space and affordability.
Data from CoreLogic suggests that this price growth was unsustainable and has a very high probability of reversing over the next 12 months.
According to Realtor.com, the median sales price in Lake Havasu City ($470,000) is well-below the median list price ($519,000), suggesting the buyers and sellers have substantially different expectations.
January 2022 median home sales price: $500,000†
Price change January 2021-January 2022: 23%
Probability of price decline in next 12 months: 50-70%
East of Lake Havasu and straight north of Phoenix, Prescott is another Arizona pandemic destination that saw rapid price growth (23%) in 2021.
CoreLogic data shows a high probably (50-75%) of price decline in the next 12 months and Realtor.com considers supply and demand balanced in Prescott – a rarity for any market in the last few years.
January 2022 median home sales price: $458,000†
Price change January 2021-January 2022: -3%
Probability of price decline in next 12 months: 25-50%
On the East Coast, the Bridgeport-Stamford-Norwalk metro area is already experiencing year-over-year price declines as the peak-pandemic migration away from major urban areas fades.
Bridgeport is located about halfway between New York City and New Haven, Conn. The median sales price for this market area peaked at $575,000 in June 2021, according to Redfin, and has declined rapidly since.
CoreLogic gives a moderate 25-50% probability that prices will decline further in the next 12 months. Low inventory may be a factor in the lower confidence score.
Related reading: 2022 Mortgage Rate Forecast: Housing Authorities Weigh in
January 2022 median home sales price: $509,000†
Price change January 2021-January 2022: 22%
Probability of price decline in next 12 months: 25-50%
Back on the West Coast, the Bremerton-Silverdale metro area is a ferry ride across the Puget Sound from Seattle, where the median sales price is over $700,000.
The Bremerton metro saw above average 22% price growth in 2021 compared to the national average of 19.1%. After several years of rapid price growth and just 0.6 months of housing supply (6 months is considered balanced) CoreLogic seems to think growth in this unhealthy market is unsustainable.
There’s also the X-factor of tech workers returning to Seattle offices, which may draw Bremerton homebuyers back across the Puget Sound to avoid a long, watery commute.
CoreLogic gives it a moderate 25-50% probability for a price decline in the next 12 months.
January 2022 median home sales price: $262,000†
Price change January 2021-January 2022: 4%
Probability of price decline in next 12 months: 25-50%
By far the most affordable and pandemic-proof metro on the list, Hartford and its East/West companions have a moderate 25-50% probability of price decline in the next year. That’s after meager 4% price gain over the last 12 months.
Hartford homeowners may feel they are missing out on rapid home appreciation, but homebuyers can feel confident they’re not paying the pandemic-premium featured in other markets.
There is a 1.3 months supply of inventory in the Hartford metro area, which is historically low, but identical to the current national average.
*Median sales price for Lake Havasu City from Realtor.com
†Median sales price for metropolitan area from Redfin.