Map Shows Home Values Dropping in Half the Country as Housing Market Shifts

Home values shot down in half the country as the housing market faces a nationwide downturn.

According to Zillow, monthly home values dropped in 27 out of the 50 states this year. While Florida, Colorado, Washington, D.C., California and Washington state experienced the greatest value declines from March to April, the data could foreshadow a larger housing market shift.

Why It Matters

The low inventory in the U.S. housing market has pushed prices upward in recent years. But as markets across the country now note an uptick in inventory, home values are coming down.

Still, many potential homebuyers have been priced out of the market due to historically high mortgage rates and economic uncertainty.

What To Know

The Zillow data revealed that real estate prices were shifting downward in more than just a few markets. While the post-pandemic era brought lower prices to Texas and Florida markets due to higher inventory and lower demand, home values across the country reflect a shifting market.

Behind Florida, Colorado, Washington, D.C., California and Washington state, which saw the most notable decreases in value this past year, were Arizona, Louisiana, West Virginia, Texas and Georgia. These states saw as much as 0.37 percent decreases in home values, while Florida saw the worst value loss at 0.55 percent.

"The broadening of this housing decline suggests there's a shift occurring in the U.S. Housing Market right now," Nick Gerli, founder and CEO of the real estate Reventure app, wrote on X, formerly Twitter, on Tuesday. "Inventory is starting to rise in most parts of the country, and sellers are beginning to wake up to the fact that prices are overvalued, and they need to cut."

Even states like California, where home prices have historically been some of the highest and demand continues to surge, experienced some course correction in home values. While values are up 1.3 percent over the last year, California home prices dropped 0.42 percent in the last month alone.

"I think this data holds key implications for housing market analysts, homebuyers, and investors in 2025," Gerli said. "The question isn't becoming 'if' prices will drop. But rather: where the drops are occurring. And by how much."

What People Are Saying

Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek: "Housing prices have declined due to their rapid rise after the pandemic. The economic shift from migration out of the West to now, a slowing of that same migration and overbuilding in places like Austin, TX, is now seeing an equilibrium shift downward. The median cost of homes rose sharply coming out of the pandemic, and that rise was unsustainable."

Hannah Jones, senior economic research analyst with Realtor.com, told Newsweek: "This summer's housing market is expected to display familiar seasonal patterns, such as increased home sales and rising prices, but overall activity may remain subdued as buyers contend with elevated housing costs and lingering economic uncertainty. In regions like the South, where inventory is more abundant, these conditions could entice some buyers to enter the market."

"Still, persistently high mortgage rates mean affordability remains top of mind, and many shoppers will be looking for more bang for their buck. Builders have pivoted toward offering smaller, more affordable homes and a range of incentives to entice buyers, but this strategy may be tested if the cost of construction inputs continues to rise."

Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek: "It's fascinating how we've gone from "your home is worth what?!" to "reality check" territory now. The housing market isn't crashing dramatically, more like it's finally coming back down to earth from a sugar high."

Nationwide title and escrow expert Alan Chang told Newsweek: "For the last few years, I have been saying that property values have been at an unsustainable growth trajectory. It appears that portions of the market have started to correct themselves. I also believe that sellers are starting to ask a more realistic sales price as they see time on market being longer than what was seen a year or two ago. I don't see this as a housing crash like some have, but more of a normalization of the market."

Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "Over the past two years, we've seen a major shift in the housing markets of certain cities and states that enjoyed a significant increase in purchases during the pandemic. As people have relocated due to "back to office" decisions, we've seen an exodus from some of those locations. Subsequently, the high prices and interest rates of homes are keeping many potential buyers out of the marketplace. It's a bad combination of factors that are causing housing values to trend downward, even if we have yet to see that impact in home sale values and declining interest rates."

What Happens Next

While many analysts believe interest rates are the housing market's main problem today, Thompson said prices of homes play a larger role in improving the market.

"It is the cost of the homes that remains the issue and prices need to correct to make it more affordable for new buyers. I expect prices to continue to fall while rates remain higher, reaching a level where buyers and sellers can come to a good price in the future," Thompson said. "The timing of that is still up in the air, but it will definitely happen as all markets tend to correct where demand and supply meet."

Some markets will continue seeing price drops while others are still growing, Ryan said.

"It's not a one-size-fits-all story anymore," Ryan said. "Here in most of Florida, Texas, and Arizona are seeing bigger corrections while places like Charlotte, Denver, and even Miami are still posting gains."

Still, on a larger scale, buyers will likely have more choices and "less frantic competition," Ryan said.

"And for sellers? Gone are the days when you could slap any old price on your house and expect a bidding war," Ryan said. "Pricing right from the start is crucial now. Overpriced listings are just sitting there collecting dust."