During a phone interview with MPA, Amir Korangy, the creator of The Real Deal, a prominent real estate publication, identified rising mortgage rates as a major factor contributing to the slowdown in the single-family housing market. However, he also acknowledged that low inventory levels, which are still below pre-pandemic levels, present a significant challenge.
Although these factors have impacted cities universally, there are four cities in particular that will suffer greatly from them, despite previously being very popular. These cities are Austin, Phoenix, San Francisco, and Seattle. Korangy analyzed the unique characteristics of each of these cities:
- Regarding the capital city of Texas, Korangy commented that “Austin rapidly became overdeveloped.” He explained that from 2009 or 2010 to 2015, the city’s population doubled, and growth continued even beyond that. In an effort to keep up with the high demand, residential developers and landlords may have exceeded what was necessary, resulting in an oversaturated market. Currently, in Austin, renting may be a more financially prudent choice than purchasing a property.
- Phoenix was once considered an affordable and desirable city to live in, but the extreme heat during summer months has caused many potential residents to rethink moving there. Despite high levels of development, Phoenix lacks the cultural vibrancy promised to newcomers, making it a challenging city to navigate. As a result, many individuals have realized that Phoenix is not the ideal city they were led to believe it was.
- Korangy’s recent visit to San Francisco revealed a desolate and empty city, which he attributes to the widespread layoffs in the tech industry. He observed a lack of people in the financial district and a drop in business at high-end restaurants due to companies vacating commercial office spaces. San Francisco’s streets appeared neglected, dirty, and uncared for, with a sense that no one was taking responsibility for them. Korangy expressed sadness at the once-great city’s current state and commented that the local government seems to have given up on it.
- Seattle has been widely reported as one of the cities experiencing the most significant decline. Redfin has identified the city as having one of the fastest-cooling housing markets in the United States. A Redfin economist has forecasted that housing prices in Seattle may decrease more rapidly than the national average, potentially dropping by as much as 10%.