The dust has begun to settle from the great pandemic home-price boom and bust. An Intel deep-dive analysis sheds light on which markets have been hit hardest by falling prices — and why.

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It’s a question virtually every real estate professional has asked themselves in the pandemic’s hottest markets.

Could runaway home-price growth — which exceeded 60 percent in markets like Austin and Tampa — possibly hold up in the nation’s hottest pandemic-era migration destinations, or would it expose these cities to an even sharper price correction down the road?

In some of these popular migration hubs, prices have indeed been falling fast in recent months.

But while migration patterns did a decent job of explaining where home values rose most quickly during the early pandemic boom, they’ve been a far less reliable predictor of how fast prices would eventually fall in those same areas, according to an extensive Intel review of population changes and home-value data. 

It’s a conclusion that’s consistent with research from well before the pandemic, Adam Perdue told Intel. He’s an economist with the Texas Real Estate Research Center, which monitors Austin, one of the nation’s chief inbound migration hubs with a slumping housing market.

“Migration is, in and of itself, the sign you have increasing demand to live in your city,” Perdue told Intel. “But there’s a lot of other factors that also play a role in price besides [migration] — supply factors and other demand factors.”

As part of its analysis, Intel reviewed home-price data from Zillow for the nation’s 100 most populous metro areas. Intel then compared rises and falls in home values at the county level with the latest migration data from the U.S. Census Bureau, and identified common patterns shared by the markets that have since seen the biggest reductions in home prices.

The results of this exercise paint a picture of a housing market where the steepest price reductions often have highly local explanations.

In some cases, once-red-hot pandemic housing hotspots have seen their initial price booms followed by big busts. But a number of cities to which people moved in droves during the pandemic have so far preserved nearly all of their pandemic home-price gains. And some of the places experiencing the steepest price dropoffs today were never particularly hot to begin with.

See below for an interactive map of U.S. migration patterns, a 30,000-foot view of the factors driving the biggest home price declines — plus the ones that aren’t — and a list of the big cities that may already be positioned at the leading edge of a potential home-price recovery.

Movers and shakers

Before diving into the effect migration has on home prices, it might be helpful to know the communities that have been most impacted by migration — inbound and outbound.

Luckily, the U.S. Census Bureau released population estimates in late March that allow us to see how people moved from 2021 to 2022 — a period that includes the meaty tail-end of the home-price run-up and slowdown as the market neared its peak.

Zoom into the interactive map below and see how your market fared. Blue-shaded communities experienced net outbound migration from 2021 to 2022. Communities shaded red were inbound migration hubs.

We can see that people continued to steadily move from expensive major cities on the West Coast, as well as from rural counties throughout the central U.S.

Meanwhile, people flocked to migration hotspots in the Mountain West, Texas and Florida. Note the pandemic-era hotspots of Boise, Phoenix and Austin remained destinations for net inbound migration from 2021 to 2022, as did Florida’s biggest population centers.

As has been reported in Inman and elsewhere, many of these same migration destinations also saw some of the strongest home-price appreciation in the early phase of the pandemic. It’s part of a phenomenon referred to by Zillow CEO Rich Barton as “the Great Reshuffling.”

But an Intel analysis of Zillow data in the 100 largest U.S. metros suggests that the markets where home values rose the fastest during the pandemic weren’t necessarily the places where prices have since crashed hardest.

Imagine standing on the precipice of the home-price correction in June of 2022, and trying to predict which markets would lose the greatest share of their home values in the ensuing months. You’d have been better off looking at where prices were already highest, rather than trying to identify some kind of boom-and-bust pattern based on how much prices had just risen.

Compare the two approaches in the images below.

At the county level, an Intel review of recent migration trends found a virtually insignificant relationship between net migration per capita and recent home-price declines.

This data detailing post-pandemic trends largely lines up with previous research showing migration patterns are only part of the home-price puzzle.

A study by Freddie Mac researchers published in 2021 — based on pre-pandemic data — found that after accounting for changes to a community’s average income and housing stock per resident, population growth may not have directly contributed to a growth in home prices.

But in the case of an unprecedented short-term migration shock, demand can grow in some metros far more quickly than housing supply can catch up, Perdue told Intel. That’s what appears to have happened in markets like Austin, Boise and Tampa, he said.

“If you aren’t letting quality supply increase relative to the demand increase, then all of that demand increase is just translated into increases in price,” Perdue said.

Either way, these results paint a picture of a market correction that’s been spurred by a mortgage-rate spike that pushed many of the nation’s most expensive home markets even less affordable territory — and, yes, helped turn some of the nation’s biggest booming markets of yesteryear into some of its biggest fallers today.

Rise and fall of the pandemic hotspot

They captured the fascination of the real estate industry for well over a year.

Pandemic-era migration destinations, fueled by a combination of job relocations and the rise of remote work, appeared to undergo a tectonic shift in home prices early in the pandemic — with some seeing home values skyrocket by more than 60 percent in a couple short years.

Experts noted how quickly prices rose in some of these places, such as the once-affordable Boise and the booming Phoenix and Austin metros.

“I think what we may have seen is not a move away from cities, but a move away from expensive cities to relatively more affordable cities,” Perdue said.

Was the rapid home-price growth there a sustainable feature of their population growth?

No, it turns out.

Chart by Daniel Houston

Since peaking in mid-2022, home prices in these three metros have seen some of the steepest drops in the country, as a share of typical home values.

Home values in Austin and Boise were down more than 9 percent from their peak levels, according to the Zillow Home Value Index. Values in Phoenix had dropped by more than 7 percent. That makes them three of the six big metros with the largest price drops since the market peak.

But despite these dramatic examples of booming markets gone bust, it’s notable how many of the pandemic’s hottest migration destinations are still going strong, with home prices that have barely dropped at all.

Florida, North Carolina and Tennessee contain many of the prime examples of this trend.

The typical home value in the greater Tampa area ballooned from $229,000 at the start of 2020 to $376,000 at its peak point in August 2022 — a 63 percent increase in less than three years. Since then, homes in Tampa have only lost 3 percent of their peak value, holding steady at $364,000.

Big pandemic gains have also held strong in Jacksonville, Charlotte, Atlanta and Nashville, among other population centers in those regions.

In other words, a rapid rise in home values in once-affordable areas was not enough to doom a city to a fast drop in prices.

But for other places — especially the metros out West already pushing the bounds of affordability — the jump in mortgage rates last year had a more consistent effect.

An affordability correction

Just because a market didn’t experience large pandemic gains doesn’t mean it was protected from a deep home-price correction.

Take the California Bay Area and Los Angeles. In these two major coastal population centers, not even the pandemic boom in home demand could push prices much higher than 35 percent above pre-pandemic levels. Compare that to the more robust price gains nationally, where home values rose by 42 percent, according to Zillow.

Still, L.A. prices fell by 5 percent — the 15th-biggest drop of any major city in the U.S. And in San Francisco, nearly twice as much value was erased in the market correction. None of the nation’s 100 most populous cities saw a larger drop in home prices from the peak.

Chart by Daniel Houston

Perdue said that the lack of uniformity between how markets responded to these market shifts is particularly notable, given that some of the main factors driving such an extreme market event — including mortgage rate movement — were felt everywhere at once.

“You have multiple things going on at the same time,” Perdue told Intel. “Mortgage rates dropping from 4 percent to 2.5 percent should have basically increased everybody’s price about 20 percent, because of the increase in purchasing power. And instead, we saw a huge variation between Houston and Austin, and Austin and California.”

What all of the markets in the chart above have in common: High home values, more people moving out than moving in during the pandemic, relatively “weak” price growth since 2020, and steep home-price downturns compared to the U.S. at large.

The leading edge?

As the spring market continues to kick into higher gear, it can be tricky to assess whether the price growth we’ve observed in recent weeks is part of a normal seasonal pattern, or if some kind of home-price recovery is in fact underway.

The charts and statistics throughout this article are all seasonally adjusted, meaning Zillow believes they properly account for the patterns we would normally expect of this type of year. And with that in mind, the market saw an apparent uptick in home values in March for the first time since prices turned south.

Time will tell whether prices have hit bottom, or whether this is a mere blip amid the relative spring rush.

But if a recovery is underway, we’re likely to see it at the market level before it shows up nationally. And right now, at least, some of the big markets leading a possible recovery are concentrated on the upper East Coast, as well as the Midwest.

Chart by Daniel Houston

It’s striking how differently these major cities are faring compared to their West Coast counterparts like San Francisco and L.A.

All underperformed the nation at large in pandemic price gains. All saw at least some degree of net outbound migration throughout the pandemic. But in Chicago, New York, Philadelphia and Baltimore, home-value reductions were slim by comparison, and prices have been rebounding for months.

Email Daniel Houston

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