Measures of homebuyer demand are falling in formerly red-hot tech hubs such as Austin, Texas, Seattle, and San Jose, Calif., and that sudden cooldown isn’t just the result of recent banking turmoil or a shaky stock market. Along with house hunters in other parts of the U.S., buyers in pandemic boomtowns are navigating low inventory, elevated home prices, and inflated borrowing costs, but tech layoffs and falling stocks are adding an additional obstacle.
In Austin, pending home sales fell 40% in February, while median price per square foot fell 13% year-over-year, but prices are still substantially higher than they were two years ago, Forbes reports.
Now housing markets in those boomtowns are doing an about-face as rates rise. Tech troubles are also contributing to dampened demand in these areas because many remote workers are struggling with layoffs and the prospect of them.
The increasing portion of home sellers dropping their asking price illustrates just how much some of these markets have cooled. In Phoenix, 70% of for-sale homes had a price drop in February, compared with 21% a year earlier—the second-biggest uptick in the U.S. It’s followed closely by Denver, where 37% of homes had a price drop in February, compared with 13% a year earlier.