The West Coast Housing Bubble is Bursting

The housing market in the West Coast region of the United States has long been constrained by high land costs and regulations on new-home construction. However, home prices reached new highs in 2021 and early 2022, which made these markets even less affordable. This led to a slowdown in demand when mortgage rates rose in 2022, with the "Zoomtowns" - metro areas that experienced rapid population growth during the pandemic - being the quickest to slow down. These included cities like Boise, Phoenix, and Austin, which had become less affordable due to an influx of out-of-state buyers with more money.

Although lower prices are expected in many housing markets, the low supply of homes for sale is expected to prevent a national price collapse. Home builders have been hampered by supply-chain issues and labor shortages, and many homeowners are sitting on large cushions of equity, which will likely prevent a big wave of foreclosures and distressed sales. While some homebuyers in certain areas may feel frustrated due to the lack of inventory and higher borrowing costs, significant declines in home values are only likely to occur if there is significantly more supply than demand.

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Source: https://www.foxbusiness.com/real-estate/tale-two-housing-markets-prices-fall-in-west-while-east-booms

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