Housing Markets With the Biggest Decline in Home Prices

Want to know where home prices are dropping the fastest? Well, the top 10 cities where home prices have crashed or fallen the most since last year are spread across the US, from New Jersey to California, with some areas seeing price decreases as steep as 25%. These areas are experiencing a correction after a period of rapid price increases or due to an increase in inventory as the sellers try to capture buyer attention.

The real estate market is always moving, like the tides. Sometimes prices surge, other times they dip. It's a natural cycle, but lately, I've been getting a lot of questions about where prices are actually falling. For potential homebuyers, this kind of news is exciting because it means affordability might be improving. But for current homeowners, it can bring about some worry. So, let's dive into the areas where home prices have seen the most significant drops recently.

Realtor.com recently released some interesting data pinpointing the ZIP codes where prices have decreased the most between the first quarter of 2024 and the first quarter of 2025. It's a diverse list, showing that price corrections aren't limited to one region. Let's break down the top 10:

Housing Markets With the Biggest Decline in Home Prices Since 2024

Top 10 ZIP Codes with the Biggest Home Price Drops

Here's a rundown of the areas where you'll find the most significant year-over-year decreases in median home list prices:

1. Spotswood, NJ (08884)
   • Median home list price: $449,000
   • Year-over-year decrease: -25%
   • About: A small New Jersey town about 38 miles outside of New York City. It's located along a train line, making it convenient to get to the Big Apple without driving.
2. South Elgin, IL (60177)
   • Median home list price: $384,900
   • Year-over-year decrease: -25%
   • About: South Elgin is a village along the Fox River. It's known for its close-knit community and affordable cost of living.
3. Carlsbad, CA (92009)
   • Median home list price: $1,199,000
   • Year-over-year decrease: -25%
   • About: Carlsbad is located along the beach just north of San Diego. It's known for its 55-acre Flower Fields garden and the Legoland theme park. Though prices have decreased year over year, it still has a median list price that's over $1 million.
4. Raleigh, NC (27615)
   • Median home list price: $465,000
   • Year-over-year decrease: -25%
   • About: Raleigh is the capital of North Carolina, which boasts a professional hockey team, Southern fried chicken, and barbecue.
5. Tomah, WI (54660)
   • Median home list price: $225,000
   • Year-over-year decrease: -25%
   • About: Tomah, located in Central Wisconsin, has a population just below 10,000. The area is known for its rides, valley, and winding roads.
6. DeQuincy, LA (70633)
   • Median home list price: $210,000
   • Year-over-year decrease: -25%
   • About: DeQuincy is north of Lake Charles and has a history as a railroad town. There's even the DeQuincy Railroad Museum for visitors. The area is surrounded by pine and hardwood forests.
7. North Miami Beach, FL (33179)
   • Median home list price: $975,000
   • Year-over-year decrease: -25%
   • About: North Miami Beach was originally named Fulford, but in 1931 the name was changed to align more with the popularity of Miami Beach.
8. San Jose, CA (95110)
   • Median home list price: $788,000
   • Year-over-year decrease: -25%
   • About: San Jose is right in the heart of Silicon Valley. It's the headquarters of major companies such as eBay and Adobe.
9. York, ME (03909)
   • Median home list price: $1,047,000
   • Year-over-year decrease: -24.9%
   • About: York is located near the southern tip of the state and is a popular summer destination. For the residents who live there year-round, it's rich in New England history.
10. Schenectady, NY (12309)
    • Median home list price: $354,450
    • Year-over-year decrease: -24.9%
    • About: Schenectady is located in the eastern part of New York. It's the city where Thomas Edison founded what became the General Electric Company.

What I find particularly striking is the geographical diversity here. We're not just talking about one region struggling; this is a nationwide phenomenon. It suggests that local factors are heavily influencing these price drops.

Why Are Prices Falling in These Areas?

According to Realtor.com senior economic research analyst Hannah Jones, several factors could be at play. Here are a few potential drivers:

• Increased Inventory: A surge in the number of homes for sale can create more competition among sellers. To attract buyers, they might need to lower their prices.
• Market Correction: Some areas experienced rapid price growth during the pandemic. What goes up must come down, and these price drops could simply be a correction to more sustainable levels.
• Shifting Buyer Demand: Changing demographics, economic conditions, or even lifestyle preferences can influence where people want to live. If demand decreases in a particular area, prices will likely follow.

I think there are also some other underlying factors to consider:

• Interest Rates: While rates have stabilized somewhat, they are still significantly higher than they were a few years ago. This impacts affordability and can cool down buyer enthusiasm, especially in markets that are already expensive.
• Inflation: The rising cost of everything from groceries to gas can put a strain on household budgets, leaving less money for a down payment or mortgage payments.
• Remote Work Trends: The shift to remote work has given people more flexibility in where they live. This could be leading to an exodus from traditionally expensive urban areas to more affordable smaller towns or even different states.

The Luxury Market is Feeling the Pinch Too

It's not just your average home seeing price cuts; the high-end market is also experiencing some adjustments. Here are some of the ZIP codes where luxury home prices (over $1 million) have fallen the most:

1. Atlanta, GA (30327)
   • Median home list price: $1,300,000
   • Year-over-year decrease: -48.8%
2. Miami, FL (33143)
   • Median home list price: $1,200,000
   • Year-over-year decrease: -46.7%
3. Dallas, TX (75205)
   • Median home list price: $2,250,800
   • Year-over-year decrease: -46.4%
4. San Diego, CA (92127)
   • Median home list price: $1,670,000
   • Year-over-year decrease: -43.9%
5. Edwards, CO (81632)
   • Median home list price: $3,500,000
   • Year-over-year decrease: -41.4%
6. Westhampton Beach, NY (11978)
   • Median home list price: $1,825,000
   • Year-over-year decrease: -40.7%
7. Los Gatos, CA (95030)
   • Median home list price: $2,998,000
   • Year-over-year decrease: -38.8%
8. Foster City, CA (94404)
   • Median home list price: $1,188,000
   • Year-over-year decrease: -37.4%
9. Boston, MA (02115)
   • Median home list price: $3,245,000
   • Year-over-year decrease: -34.4%
10. Calabasas, CA (91302)
    • Median home list price: $2,370,000
    • Year-over-year decrease: -34.1%

Even luxury markets are experiencing price corrections. This could be due to an influx of lower-priced properties or a decrease in buyer demand for ultra-expensive homes. It’s interesting to note that the South has seen a significant increase in smaller, low-priced listings over the last couple of years, which changes the mix of homes for sale and can result in falling prices.

What Does This Mean for You?

If you're a buyer, this news is generally positive. It means you might have more negotiating power and a better chance of finding a home within your budget. However, it's important to do your research and understand why prices are falling in a particular area. Is it a temporary blip, or is there a more fundamental shift happening?

If you're a seller, this is a wake-up call. It's crucial to be realistic about your asking price and to make sure your home is in top condition to attract buyers. Working with a knowledgeable real estate agent who understands the local market is more important than ever.

Here is a small table summarizing this information:

Area	Price Decrease (%)	Median Home List Price
Spotswood, NJ	-25%	$449,000
South Elgin, IL	-25%	$384,900
Carlsbad, CA	-25%	$1,199,000
Raleigh, NC	-25%	$465,000
Tomah, WI	-25%	$225,000
DeQuincy, LA	-25%	$210,000
North Miami Beach, FL	-25%	$975,000
San Jose, CA	-25%	$788,000
York, ME	-24.9%	$1,047,000
Schenectady, NY	-24.9%	$354,450

Summary:

The real estate market is dynamic. What's happening in one ZIP code might not be happening in the next. It's crucial to stay informed, do your research, and work with professionals who can help you navigate the complexities of the market. While these price drops might seem alarming, they could also present opportunities for those who are prepared to act.