WASHINGTON, D.C. — When it comes home sales, no matter which side of the transaction you’re on, it can be tricky to maneuver.
“When a seller wants to sell their home, the problem is, they can sell their home, but they don’t have a property to go to,” said Lydia Pope, president of the National Association of Real Estate Brokers.
Where to go to buy a home may come down to geography for some, which accounts for how pre-pandemic, affordable real estate markets -- like Boise, Idaho – become red hot.
“They're the number one most overpriced city,” said Ken H. Johnson, a professor at Florida Atlantic University’s College of Business.
Johnson, along with other researchers, just released new findings on the nation’s home prices, and changes are afoot.
“We continue to have a housing shortage and the population movement is what it is,” he said. “But the rise in interest rates, I think we're starting to see this downturn that has been long anticipated.”
That downturn, Johnson said, is beginning in the western half of the country, where home prices have reached a so-called “pricing crown.”
“In other words, we're peaking in terms of pricing and the separation—between where prices should be in a long-term trend and where they are —are coming back together,” he said. “That's suggestive that we're starting to see some price downturns, and it appears to be going to be beginning in the western half of the U.S.”
Researchers found that leveling-off of home prices includes places like Boise, Idaho, and San Diego, California.
By contrast, home prices in the eastern half of the U.S. are still rising, in cities like Atlanta and Charlotte, but also places like Nashville, Columbus, Ohio and Tampa and Fort Myers, Florida.
“The western half of the U.S. has been more overpriced, relatively speaking, than the eastern half,” Johnson said. “So, it might make sense that you would see this beginning in the West.”
How much of a home price downturn will happen remains to be seen, but it will likely come down to two main factors.
“Cities that will thrive and do better with this will be those that are increasing in population and not separated so far from where their prices are, versus where they actually should be,” Johnson said.
As for those people still in the hunt for a home, Johnson cautioned, it doesn’t always come down simply to price.
“A house is something more than a financial asset,” he said. “So, there's nothing wrong with being in a market that's a little hot. You just don't want it to be too overheated and buy near the peak.”
It’s a peak that will vary from coast to coast.