Bubble Trouble: When Housing Markets Hit Their Ceiling

The housing market's shifting tides are revealing a fascinating divide across America. Despite headlines about soaring costs, our data shows 42 of the 300 biggest metro areas actually experienced price drops in 2025—up significantly from just 31 cities the month before.

Diving deep into these cooling markets, we find a striking pattern centered in the Sunbelt. Austin leads with a 3.8% decline, followed by Tampa (-3.6%), San Antonio (-2.0%), and Phoenix (-1.6%). These once-unstoppable pandemic boomtowns are now adjusting as migration patterns shift and supply catches up with demand. The narrative of endless price increases simply doesn't hold true anymore.

What's behind this remarkable shift? We identify three critical factors reshaping these markets. First, inventory levels have rebounded and in some places exceeded pre-pandemic numbers, giving buyers more choices. Second, many cities hit natural affordability ceilings as prices outpaced local incomes. Third, aggressive competition from homebuilders, particularly in construction-friendly states like Florida and Texas, is putting downward pressure on prices through incentives and rate buy-downs.

These changes create tangible opportunities for buyers who've been waiting on the sidelines. The power dynamic has shifted, allowing room for negotiation on price, repairs, and closing costs. For first-time buyers previously priced out of certain markets, this correction—possibly combined with stabilizing mortgage rates—might provide that long-awaited entry point. Similarly, investors with long-term horizons could find strategic opportunities in markets adjusting now but retaining strong growth fundamentals.

As we navigate these complex market shifts, one thing becomes abundantly clear: the era of predictable nationwide housing trends is over. Understanding local conditions—from inventory levels to job growth—matters more than ever. What could these changes mean for your housing decisions in the months ahead? Subscribe now for more market insights delivered straight to your feed.

📰 Read more about this topic in our latest article:  https://sunrisecapitalgroup.com/us-housing-market-trends-in-2025-the-top-10-cities-where-prices-are-dropping/

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Disclaimer: The content provided on this channel is intended for educational and informational purposes only and does not constitute investment, financial, or tax advice. We strongly recommend that you consult with qualified professionals before making any financial decisions. Past performance of investments is not indicative of future results. The information presented here is not a solicitation or offer to buy or sell any securities or investments. Our firm may have conflicts of interest, and we do not guarantee the accuracy or timeliness of the content provided. Investing involves risks, and you should carefully consid...

Episode Transcript

Speaker 1 (00:00):
You know we're constantly hearing these
headlines right Housing costs,soaring.
Owning a home feels like it'sjust getting further and further
away.

Speaker 2 (00:07):
It dominates the news cycle.

Speaker 1 (00:09):
But here's where things get really interesting.
Looking at the actual data for2025.
Well, the picture is quite abit more nuanced.

Speaker 2 (00:19):
It really is.

Speaker 1 (00:20):
While, yeah, the national average might show a
small bump up, a prettysignificant number of cities are
actually seeing home pricesfall.

Speaker 2 (00:26):
That's exactly right.
That whole story of justendless price increases, it's
just not the reality everywhereanymore.

Speaker 1 (00:33):
Right.

Speaker 2 (00:33):
What our sources are showing is this fascinating
split across the country.
So for this deep dive, that'swhat we're digging into, these
shifting tides, okay, we'llpinpoint the markets in drops,
unpack the reasons why and,maybe most importantly, explore
what it all means for you.

Speaker 1 (00:49):
All right, let's start with that big picture, the
national overview.
So the average US home pricewent up.
What about 2.1% from Feb lastyear to this Feb?

Speaker 2 (00:57):
Correct 2.1%.
On the surface, yeah, it lookslike growth.

Speaker 1 (01:00):
But digging deeper we find that 4242 of the 300
biggest metro areas actually sawprices go down.

Speaker 2 (01:09):
And think about this just the month before that
number was 31.

Speaker 1 (01:12):
Wow, ok, so that's quite a jump.
It feels like this coolingtrend is picking up steam in
certain spots, doesn't it?

Speaker 2 (01:19):
It really does that national average.
It kind of papers over thesereally important regional
stories and what's reallytelling is where this cooling is
happening.
It's not just random, it'sfocused really in those areas
that saw the absolute biggestprice surges during the pandemic
housing rush.

Speaker 1 (01:36):
Ah, ok, so we're talking Sunbelt, yeah, places
like Florida, texas, arizona.

Speaker 2 (01:40):
Exactly, those are the hotspots, the boom markets,
and now, well, some of them areseeing a definite shift.

Speaker 1 (01:46):
Okay, let's get into the specifics then.
The top 10 markets with pricedrops in 2025.
Leading the pack is Austin,Texas, down 3.8%.
What happened there?
Austin felt unstoppable for awhile.

Speaker 2 (01:59):
It really did.
Austin's popularity justexploded during the pandemic
right Pulled in tons of newpeople, yeah, but that pushed
prices up so fast, so high, thatit looks like it just hit a
wall.
An affordability ceiling Makessense and we're also seeing more
homes for sale there now,partly because some of that
remote work migration thatfueled things it's reversing a
bit.
So, yeah, demand has cooled off.

Speaker 1 (02:19):
Interesting.
Okay, next up Tampa, florida,down 3.6 percent.
Similar story playing out there.

Speaker 2 (02:26):
We're seeing related things in Tampa.
Yeah, that big wave of remoteworkers coming in, that slowed
down too.

Speaker 1 (02:31):
Right.

Speaker 2 (02:31):
And at the same time you've got more houses on the
market.
So put those together andbuyers suddenly have more
choices, which means morebargaining power.

Speaker 1 (02:40):
Gives them leverage.
Ok, san Antonio, another Texascity down 2.0 percent Now.
I always thought of San Antonioas like the more affordable
option compared to Austin orDallas.
What's driving the drop there?

Speaker 2 (02:52):
Well, even though it was relatively more affordable,
prices there still grew fasterthan local paychecks did.
That created this imbalance.
You know, it just wasn'tsustainable.
So this dip it feels like anecessary correction, bringing
house prices back towards whatthe local economy can actually
support.

Speaker 1 (03:14):
Gotcha, new Orleans, louisiana, minus 1.7 percent.
This one feels maybe differentfactors are at play.

Speaker 2 (03:17):
That's a good point.
New Orleans has struggled a bitmore with ongoing affordability
issues.

Speaker 1 (03:24):
OK.

Speaker 2 (03:24):
And job growth hasn't been quite as strong as in some
other Sunbelt cities.
Those longer term economicpressures they're likely adding
to the downward push on homeprices there.

Speaker 1 (03:33):
Okay Then Phoenix, arizona down 1.6%.
Another Sunbelt classic thatboomed and is now well adjusting
.

Speaker 2 (03:41):
Exactly, phoenix had a massive run up.
A lot of that was driven bypeople moving in from out of
state, especially California.
Exactly, phoenix had a massiverun up.
A lot of that was driven bypeople moving in from out of
state, especially California.

Speaker 1 (03:47):
Right, I remember that.

Speaker 2 (03:48):
Now that out of state demand, it's easing off.
Plus, there's been a lot of newhome construction, so the
market's just, you know, findingits new level.

Speaker 1 (03:54):
Makes sense.
Jacksonville, florida, is nextdown 1.5 percent.
What's the story inJacksonville?

Speaker 2 (03:59):
Jacksonville seems to be a mix of things Fewer people
moving in compared to beforeand at the same time, more
houses available overall, moresupply, less new demand.
That usually pushes prices down.

Speaker 1 (04:12):
Simple economics really OK.
Dallas, texas down 1.4 percent.
Now that's interesting becauseDallas is such a big economic
engine.

Speaker 2 (04:19):
It is Absolutely.
Dallas is still a strongeconomic hub, but even there the
housing market seems to behitting a point where supply is
catching up, maybe even gettinga little ahead of the current
demand.
There's just a lot of inventoryavailable and homes aren't
selling quite as fast as theyused to Market saturation
perhaps.

Speaker 1 (04:38):
Orlando, florida also minus 1.4%.
Does tourism factor in there?

Speaker 2 (04:42):
It looks like it does .
Yeah, we're seeing signs thatinvestors aren't quite as keen
on Orlando right now.
Okay, and if tourism cools offeven a bit, that can dampen
housing demand too, especiallyfor certain types of properties
like short-term rentals.
So softer demand seems to bepart of the story.

Speaker 1 (04:59):
Colorado Springs, colorado, down 1.2 percent.
That market was supercompetitive not long ago.

Speaker 2 (05:04):
It really was.
Colorado Springs is seeingslower growth now.
There's definitely more supplyavailable than there was during
the frenzy and it seems likemaybe buyer tastes are shifting
a little too.
So you don't have those crazybidding wars anymore, leading to
some price adjustmentsdownwards.
Okay, so you don't have thosecrazy bidding wars anymore,
leading to some priceadjustments downwards.

Speaker 1 (05:21):
OK, and finishing the top 10, fort Myers, florida,
down 1.1 percent, another spotpopular with retirees and remote
workers.

Speaker 2 (05:30):
Yeah, fort Myers definitely drew in those groups.
The price dip now suggests themarket's just adapting.
You know, the demand fromretirees and telecommuters isn't
maybe as intense as it was.
The factors that drove thatgrowth are changing.

Speaker 1 (05:44):
So, ok, we're definitely seeing a pattern here
, especially in the Sunbelt.
We zoom out a bit.
What are the like?
The main, pretty significantoversupply of homes in many
areas.

Speaker 2 (05:53):
Oversupply.
Ok yeah, inventory.
The number of homes for sale ina lot of these Sunbelt cities
hasn't just bounced back topre-pandemic levels, and in some
cases it's actually higher now.

Speaker 1 (06:11):
Wow.

Speaker 2 (06:11):
In all that choice.
It just gives buyers way morepower.
Sellers have to be moreflexible on price.

Speaker 1 (06:16):
That makes total sense.
More options mean sellers haveto compete harder.
What's the second big factor?

Speaker 2 (06:23):
The second one is hitting affordability caps.
It's simple, really Prices inthese places just shot up so
high so fast, they went beyondwhat local people could actually
afford.
And now that the big rush ofpeople moving in during the
pandemic has slowed down, well,local incomes just can't keep
those super inflated pricespropped up.

Speaker 1 (06:42):
So the frenzy outpaced the fundamentals.

Speaker 2 (06:50):
Exactly.
It's like a balloon that gotblown up too quickly and now
some air is slowly coming outand needed correction really OK.

Speaker 1 (06:52):
So supplies up.
Affordability got stretched toothin.
What's the third driver?

Speaker 2 (06:57):
The third piece is competition from builders.
Especially in states likeFlorida and Texas, Construction
didn't really slow down thatmuch.
So to keep selling those newhomes, builders are getting
competitive.
They're lowering prices,offering discounts or doing
things like mortgage rate buydowns.

Speaker 1 (07:13):
Can you quickly explain what a buy down is?

Speaker 2 (07:16):
Sure, basically, the builder pays some of your
mortgage interest for the firstyear, or two, sometimes three,
so your monthly payment startsout lower.
Oh, the builder pays some ofyour mortgage interest for the
first year, or two, sometimesthree, so your monthly payment
starts out lower, oh OK.
And when builders are doingthat, offering deals on brand
new houses, it puts pressure onpeople selling existing homes
nearby to lower their prices too.

Speaker 1 (07:32):
Right, they have to compete.
Ok, so we've got oversupply,stretched affordability and
builder competition, all pushingprices down in these specific
markets.
Now something else came up inour sources, kind of an
unexpected curveball tariffs.

Speaker 2 (07:46):
Yes, this was interesting.
New tariffs introduced back inApril 2025, they caused some
jitters in the financial markets.

Speaker 1 (07:53):
How so.

Speaker 2 (07:53):
Well, we saw the S&P 500 dip nearly 5% and yields on
long-term bonds fell.
Now that drop in bond yieldsactually pushed mortgage rates
down.
They hit a four-month lowaround 6.63%.

Speaker 1 (08:06):
Okay, wait.
Lower mortgage rates Isn't thatusually good news for
homebuyers?
Makes things cheaper.

Speaker 2 (08:11):
Normally, yes, absolutely, but in this specific
context it's maybe a bit of adouble-edged sword.

Speaker 1 (08:17):
How do you?

Speaker 2 (08:18):
mean Well, yes, lower rates could help with
affordability on paper, but ifthese tariffs end up slowing
down the whole economy or, worstcase, contribute to a recession
, then that could actuallyweaken overall demand for houses
.
People might get nervous aboutjobs, about the future, and
decide not to buy a house rightnow, even with slightly lower

(08:38):
rates.

Speaker 1 (08:39):
So the lower rates might not be enough to overcome
broader economic worriestriggered by the tariffs.

Speaker 2 (08:45):
Exactly.
It just adds another layer ofcomplexity, another thing to
watch and it really highlightswhy you've got to pay super
close attention to those localeconomic details.
You know job growth in yourcity, how much inventory is
really available, how much newconstruction is happening nearby
your city, how much inventoryis really available, how much
new construction is happeningnearby?
Those become even more criticalwhen you have these big
external pressures like tariffs,potentially impacting things

(09:06):
Okay.

Speaker 1 (09:07):
So, given all this the price drops in certain
cities, the shifting conditions,the tariff uncertainty what
does this mean in terms ofopportunities for buyers, maybe
investors?

Speaker 2 (09:16):
Well for buyers, especially in those markets
seeing prices soften.
The biggest plus is definitelymore negotiating power.
Right, you might find you canactually haggle on the price now
, which felt impossible a coupleof years ago.
Or you could ask the seller topay for needed repairs or even
help cover some of your closingcosts.

Speaker 1 (09:35):
It's not just about getting a lower list price, it's
about the whole negotiation.

Speaker 2 (09:38):
Exactly.
It's a much different feel thanthe you know, the crazy bidding
wars where buyers had almostzero leverage.

Speaker 1 (09:45):
OK, and what if you're looking at real estate as
an investment?
Any potential upsides here?

Speaker 2 (09:51):
Potentially yes.
For investors who are thinkinglong term, these price
corrections could be interestingentry points, especially in
markets that are dipping now butstill have good underlying
fundamentals like stillprojecting decent population
growth, still creating jobs overthe long haul.
Austin and Phoenix werementioned as examples places
adjusting now but maybe stillgood bets for the future if you

(10:14):
can ride out the currentsoftness.

Speaker 1 (10:16):
And what about first-time homebuyers?
It felt like they werecompletely priced out of some of
these places.

Speaker 2 (10:21):
This could actually be a really positive shift for
them, those markets that seemtotally out of reach financially
.
They might start looking moreaccessible now, especially if
mortgage rates do continue todrift down a bit.
This might just be the windowsome first-time buyers have been
desperately waiting for tofinally get into the market.

Speaker 1 (10:38):
OK, so let's try and wrap this up.
The big picture for the UShousing market in 2025 is well,
it's complicated.
It's definitely not just onestory.
Not at all.
We're seeing these prettysignificant adjustments, these
corrections happening,particularly in those Sunbelt
markets that went kind ofsupernova during the pandemic.

Speaker 2 (10:59):
That's the core message.
I think that era of just easy,automatic price growth
everywhere, especially in thosehot markets, that seems to be
over, at least for now.

Speaker 1 (11:08):
The simple narrative is gone.

Speaker 2 (11:09):
Right, it's much more market by market now.

Speaker 1 (11:11):
And this whole shift is creating real opportunities
for buyers definitely Maybe forsavvy investors too.
You mentioned Tampa and Austinspecifically as places where
buyers might find they have abit more clout now.

Speaker 2 (11:23):
Exactly, the power dynamic is shifting back towards
buyers a bit in markets likethose, giving them more room to
negotiate.

Speaker 1 (11:30):
So, as we finish this deep dive, it really hammers
home how vital it is to watchthose local signs, doesn't it?
Inventory levels, mortgage ratemoves what the local economy is
doing.

Speaker 2 (11:41):
Absolutely crucial.

Speaker 1 (11:42):
National headlines give you a mood, but local data
tells you the reality on theground you a mood, but local
data tells you the reality onthe ground and for you listening
, I guess the takeaway thoughtis how might these shifts, this
cooling in some areas, theimpact of rates, the economic
backdrop, how might all thataffect your housing plans or
maybe your investment?
Thinking down the road,Definitely something to keep a
close eye on.