These housing markets are seeing the biggest drop in prices since the height of the pandemic

A conceptual illustration depicting housing in the United States. via Getty Images

Rapidly rising mortgage rates have more than doubled this year. Couple that with a record increase in home prices and many potential buyers have been driven out of the market.

But recent data from a specialist in mortgage data offers some relief.

Each month, the Black Knight Mortgage Monitor examines a variety of issues related to home prices, affordability and inventory levels across the country.

Data from August 2022 showed that house prices continue to pull away from pandemic peaks – and that one region of the country, in particular, is seeing the biggest drop.

House prices are falling

The data showed that median house prices fell 0.98% in August 2022, following July’s advance which saw a decline of just over 1%.

“The housing market has not seen such a significant two-month price decline since shortly after Lehman Brothers collapsed in the winter of 2008,” Black Knight said. said in his report.

Lehman’s bankruptcy in September 2008 marked the start of the global financial crisis and was a major catalyst for financial collapse. It was the largest bankruptcy in US history, with Lehman listing $639 billion in assets at the time.

Overall, the average home price is down 2.2% from its peak in June, which represents a cost of around $8,800. However, prices are still up 12.1% compared to the same period last year due to the record growth seen in late 2021 and early 2022.

Time will tell what these property prices do as the market begins to enter its natural down season.

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A row of townhouses under a blue sky. via Getty Images

Where house prices are falling

Prices have retreated from their highs in 97 of the country’s 100 largest markets, including the top 50.

The largest drops continue to be concentrated on the west coast, but cracks are starting to form elsewhere, dark knight said.

San Jose saw the largest decline in median home prices at 13%, followed by San Francisco at 10.8% and Seattle at 9.9%.

Las Vegas, Austin, Minneapolis, Washington, Raleigh and Nashville have also lost 3% or more in home values ​​in recent months, and that list of non-Western markets is likely to continue to grow, Black Knight said.

The Southeast and Midwest are seeing a modest decline, with Detroit at a 2.5% reduction.

The Midwest also has several of the cities that have become the most affordable right now, requiring a payment-to-income ratio of around 25%.

A well-known method of mortgage payment suggests that homeowners spend 28% or less of their monthly gross income on housing. The least affordable markets, mostly on the West Coast, all need about double that to buy a home at the median price — with Los Angeles topping 72%.

San Francisco will likely be the first market to see year-over-year declines in annual home prices, as prices, which rose 19.5% earlier in the year, were essentially flat at the end of the August, Black Knight said.

Neighboring San Jose is likely to be in a similar position.

This story was reported from Detroit. The Associated Press contributed.

Edward N. Arrington