--- title: 5 Cities Where Home Prices Are Most Likely to Drop Soon description: The five U.S. housing markets where home prices are most likely to fall are all in the Pacific Northwest, according to a new analysis. authors: - name: Leslie Cook role: Editor, Real Estate url: https://money.com/author/leslie-cook/ bio: Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. She also writes about home renovation trends and tips. education: Bryn Mawr College, BA History certifications: Certified Personal Finance Counselor at_money_since: 2019 articles: 798 covers: - Housing - Banking - Credit - Economy and Politics - Identity Theft - Insurance - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Taxes social: - https://twitter.com/LeslieLCook - https://www.linkedin.com/in/leslie-cook-9829b9198/ published: '2022-07-05T19:55:15.000Z' modified: '2024-01-10T15:26:01.000Z' section: Housing tags: - home prices - News word_count: 562 canonical: https://money.com/cities-where-home-prices-likely-drop/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo collage of a row of homes with a Sale Sign In-front](https://img.money.com/2022/07/News-Home-Prices-Likely-To-Drop.jpg?crop=0px%2C174px%2C2880px%2C1620px&quality=85) The days of record-high house prices in the U.S. could be disappearing. In fact, research indicates home prices will drop in the months ahead in some of last year’s hottest real estate markets. Overall [home price growth](https://money.com/when-will-home-prices-fall/) is expected to slow down dramatically in the U.S., and five cities now have a greater than 70% chance of seeing price declines over the next year, according to data analytics provider [CoreLogic](https://www.corelogic.com/press-releases/corelogic-data-national-home-price-gains-continue-to-exceed-20-in-may/). The company factored in economic housing and economic data across nearly 400 cities in all 50 states to determine the likelihood of a housing bubble popping in each market. The top five markets where home prices are especially likely to fall are all located in the Pacific Northwest. **Top 5 markets where home prices are most likely to fall** 1. Bremerton-Silverdale, Washington 2. Bellingham, Washington 3. Boise, Idaho 4. Tacoma-Lakewood, Washington 5. Olympia-Tumwater, Washington Selma Hepp, deputy chief economist at CoreLogic, notes that these markets in the Pacific Northwest have probably been overvalued, and they are more sensitive to recent changes in economic conditions and [mortgage rates](https://money.com/current-mortgage-rates/). “Overall, in addition to market overvaluation due to a strong surge in home price, particularly in Idaho, the decline in national consumer confidence, and the increase in mortgage interest rates are the biggest drivers behind the risk” of home prices dropping, says Hepp. ## Signs of a shifting housing market What a difference a year makes. In 2021, two of the markets cited above were among the top five places for homeowners' return on investment when it came time to sell, according to real estate data provider [ATTOM](https://www.attomdata.com/news/market-trends/home-sales-prices/attom-year-end-2021-u-s-home-sales-report/). Boise homeowners saw an average return of 121.8%, while Bremerton homeowners enjoyed an ROI of 82.7%. Boise was also among the top five cities for median home price increase last year, up by 27.2% year over year, compared to a national increase of 16.9%. The quick about-face in the housing market comes largely as a result of rising mortgage rates, [high inflation](https://money.com/inflation-hitting-middle-class-hard/) and increasing [fears of a recession](https://money.com/are-we-in-a-recession/). Many would-be buyers have been priced out of the market as monthly payments rise and their [buying power has eroded](https://money.com/rising-mortgage-rates-hurt-homebuyers/). ## Good news for homebuyers Overall market conditions, while still very favorable to sellers, are starting to shift a little more towards buyers. Slowing demand has led to [an increase in inventory](https://money.com/record-inventory-growth-supply-crisis/), with June seeing an 18.7% year-over-year increase in new listings, the fastest rise in inventory since 2017, according to [Realtor.com](https://www.realtor.com/news/trends/real-estate-market-recovering-from-pandemic-june-inventory/). At the same time, asking prices are starting to come back down to earth as a new [reality sets in for sellers](https://money.com/overvalued-housing-markets/). Asking prices actually decreased by 1.5% between May and June this year, according to real estate brokerage [Redfin](https://www.redfin.com/news/housing-market-update-asking-prices-decline/). The number of sellers offering price reductions has increased to 6.5%, the highest rate ever recorded since Redfin started tracking the data in 2015. As the market continues to cool off, buyers who are still intent on purchasing a home this year are bound to start seeing more favorable opportunities pop up. “Between now and the end of the year I think the power will continue to shift towards buyers, resulting in mild price declines from month-to-month,” said Redfin chief economist Daryl Fairweather in a statement. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/cities-where-home-prices-likely-drop/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Housing", "item": "https://money.com/housing/" }, { "@type": "ListItem", "position": 3, "name": "Real Estate", "item": "https://money.com/real-estate/" }, { "@type": "ListItem", "position": 4, "name": "5 Cities Where Home Prices Are Most Likely to Drop Soon" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/cities-where-home-prices-likely-drop/#webpage", "url": "https://money.com/cities-where-home-prices-likely-drop/", "name": "5 Cities Where Home Prices Are Most Likely to Drop Soon", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2022-07-05T19:55:15.000Z", "mainEntity": { "@id": "https://money.com/cities-where-home-prices-likely-drop/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/cities-where-home-prices-likely-drop/#breadcrumb" }, "dateModified": "2024-01-10T15:26:01.000Z" }, { "@type": "NewsArticle", "headline": "5 Cities Where Home Prices Are Most Likely to Drop Soon", "articleSection": "Housing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2022/07/News-Home-Prices-Likely-To-Drop.jpg?crop=0px%2C174px%2C2880px%2C1620px&quality=85", "width": 1012, "height": 569, "caption": "News-Home-Prices-Likely-To-Drop" } ], "author": [ { "@type": "Person", "name": "Leslie Cook", "url": "https://money.com/author/leslie-cook/", "@id": "https://money.com/author/leslie-cook/#author", "description": "Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. 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