Home Prices in the Western U.S. Are Falling. But in the East, They’re Rising.

published Jun 27, 2023
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If you’ve been trying to buy or sell a house — or if you’re just a casual Zillow scroller — then you’ve likely noticed some shifts in the real estate market lately. Interest rates are high, the number of available houses on the market is low, and competition is fierce.

Yet within these broad, nationwide trends, an interesting pattern has emerged. It’s no secret that there’s always some amount of variability from region to region — and even from neighborhood to neighborhood — in real estate. But never before have real estate experts seen such a stark contrast between the western and eastern halves of the United States, according to the Wall Street Journal.

In the Western U.S., home prices in major metropolitan areas declined year-over-year in January, while in the East, the opposite was true. In some East Coast cities, like Miami, home prices went up 12 percent from January 2022 to January 2023. Meanwhile, West Coast cities like San Jose saw home prices drop by 10.5 percent.

That’s according to statistics from Black Knight Inc., a mortgage data firm. Things have shifted a little bit since January — prices are starting to inch back up along the West Coast, for instance — but, by and large, the nation continues to be split vertically right down the middle, according to the company’s latest analysis.

What does all this data mean in reality? “Home buyers and sellers will have a very different experience depending on where they are shopping,” says Jeff Tucker, a senior economist with Zillow. 

Regardless of where they are house-hunting, buyers all across the country are likely facing more competition than they expected, he adds. “Not because there are a huge number of buyers to compete with, but because there aren’t many homes on the market to go around,” Tucker says.

Credit: Raymond Forbes LLC/Stocksy

Why are the prices split?

Real estate experts say the east-west divide has a lot to do with local and regional factors, such as economic growth, affordability, and the supply of housing inventory. Both companies and people are moving around, a trend that began during the height of the COVID-19 pandemic and continues today. Remote work, layoffs, quality of life, cost of living, and business-friendly tax policies are just some of the reasons behind this national shakeup.

Florida, for instance, has attracted numerous companies, both big and small, in recent years. And employees are following. Coupled with a lack of inventory, this spike in demand has pushed home prices up.

In northeast Florida, bi-coastal real estate agent Cara Ameer has noticed a surge of interest from out-of-state buyers who want to relocate to the Sunshine State. Country clubs and beach clubs are now so full that many have started waitlists for new members.

But when buyers start looking for houses there, they often experience sticker shock — even if, theoretically, they understand what’s happening with the local real estate market, she says.

“The notion of moving to Florida and buying a ‘nice pool home’ or something walkable to the beach for $450,000 simply does not exist,” she says. “We have had several buyers who came to look this year who are on hold because what they thought they could buy versus what reality delivers is quite different.”

The way she sums it up? “I would say Florida is now having ‘California problems’ as far as lack of affordability and low inventory.” 

In California, where she also works, Ameer says buyers are grappling with higher interest rates and low inventory, too — but because California real estate has always been expensive, buyers aren’t quite as surprised. Even though prices have dropped there to some degree, houses still aren’t exactly cheap.

“In general, I would just say real estate has always been a bit complicated, but now it has become really complicated,” Ameer says.