The market is giving back some post-pandemic gains
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More than half of U.S. homes lost value over the past year, the highest rate of depreciation since 2012.
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The decline in home values is especially pronounced in many Sun Belt and West Coast metro areas where rapid growth during the pandemic is now unwinding.
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For potential buyers, 2025 is shaping up as a buyers market in many places, as elevated mortgage rates and growing inventory tilt leverage back toward purchasers.
Declining home affordability has usually been blamed on mortgage rates, but inflated home prices that surged during the COVID-19 pandemic are actually to blame. Todays mortgage rates are historically normal home prices are not.
But that may be changing. After years of historic growth fueled by pandemic-era demand, 2025 is seeing a broad correction in U.S. home values. While national indexes still show modest overall gains, the gains have flattened dramatically and in dozens of metro areas, home prices have actually fallen.
According to a recent analysis by real estate platform Zillow, 105 of the 300 largest U.S. metro areas reported year-over-year declines in home values during the 12 months leading into late 2025. In many of these places once the hottest hot-markets inventory has risen, demand has cooled, and buyers now have significantly more negotiating power.
Where prices are dropping most
Some of the hardest-hit markets include:
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Austin, Texas Once emblematic of booming Sun Belt growth, Austin has seen home values slide by several percentage points.
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Tampa, Florida Among the steepest declines in the country, reflecting a retreat in demand and rising supply of homes.
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Miami, Florida Once red-hot, Miamis housing values have slipped as mortgage rates climb and buyers retreat from previously overheated markets.
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Other notable markets with declines include Dallas, Texas, Phoenix, Arizona, Orlando, Florida, and Jacksonville, Florida.
Overall, many of the largest drops are in Sun Belt and West Coast areas places that saw dramatic gains earlier in the decade.
Whats driving the decline
Several broad trends are combining to push home values downward in many markets:
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Higher mortgage rates Rates remain elevated compared with the pandemic lows, which suppresses buyer affordability and weakens demand.
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Rising inventory and easing demand After a period of tight supply, more homes have been listed, giving buyers more choices and shifting leverage away from sellers.
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Market correction after a boom Many of the markets seeing the steepest declines were big winners during the housing boom. As growth settles, price adjustments follow.
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Economic uncertainty Broader concerns about inflation, interest rates, and job stability have made many potential buyers more cautious, reducing the pool of active purchasers.
What it means for buyers, sellers and homeowners
For buyers: 2025 presents opportunities. Buyers who were previously priced out might find more negotiable sellers, especially in Sun Belt or West Coast metros where values are falling.
For sellers: It may be a tougher market some may need to adjust expectations or offer incentives to attract buyers. Homes that remain on the market may sit longer than in recent years.
For homeowners who bought earlier (pre-2023), many still retain significant equity. Even where home values have dropped, most residences remain well above pre-boom valuations meaning that while prices are falling, many homeowners are not underwater.
That said, the shifting dynamics reinforce the need for buyers and sellers to pay close attention to local conditions not just national headlines especially as mortgage rates, supply, and demand continue to evolve.
Posted: 2025-12-08 12:25:48















