I’m a Real Estate Expert: 8 Overvalued Pandemic Boomtowns That Could Soon Plummet in Value

Vance Cariaga

Sun, 14 Jul 2024, 7:01 am4-min read

COVID-19 had a major impact on the U.S. housing market, as a rise in remote work led many urban Americans to relocate to less expensive suburban markets in Sunbelt states. This in turn created pandemic boomtowns that saw a rapid rise in demand and a spike in home prices. But today, many boomtowns could see their fortunes turn in the other direction.

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Housing prices in certain markets “escalated very quickly” during the pandemic, according to Nikki Beauchamp, an associate broker at Sotheby’s International Realty in New York City. Competitive bidding priced many locals out of the market. Meanwhile, Americans with the money bought second homes in other markets for remote working situations, which drove prices up even further.

“Many of my [New York] clients purchased homes in other parts of the country – but did NOT sell their NYC residences,” Beauchamp told GOBankingRates. “I had other clients who were not sure that they would be permitted to indefinitely work remotely, and some who thought they might, only to lose their jobs during layoffs.”

Post-pandemic, housing dynamics have shifted again. Remote work in many cities has been replaced by hybrid work situations where you must head to the office at least a couple of times a week, forcing many Americans to move closer to where offices are located. In other cases, boomtown prices became so inflated that many house hunters stopped looking there altogether.

One result is that some former pandemic boomtowns have become overvalued and could see prices head south in the future.

“I would be most keen to keep an eye on western states and the southeast,” Beauchamp said. “A member of my family decided in 2020 they would buy a home in North Carolina. They closed in 2021 and I believe as of now the value of their home has increased at least 35%.”

In a June 2024 blog shared with GBR, CoreLogic Real Estate Economist Thom Malone warned against suggesting that boomtowns could soon see their prices crash. He wrote that many of these markets were hot even before the pandemic and currently have “strong fundamentals for continued price appreciation” over the long run.

However, other experts have a less optimistic view. A recent article in Fortune noted that the “allure of pandemic boomtowns is either fading fast” or simply a correction of pandemic trends. Fortune cited comments from Nicholas Gerli, chief executive of Reventure Consulting, a provider of housing data and analytics.

“These pandemic boomtowns, they just got way too expensive over the last two or three years,” Gerli said in an interview with CNBC. “They’re 20%, 30%, maybe even 40% overvalued in some cases, and now that we’re seeing the inventory levels spike and the number of price cuts on the market spike, that’s the signal for you all out there that the market is shifting down, particularly in Texas and Florida. Those are the two markets right now where we’re seeing the biggest downturn.”

Here are eight boomtown markets that could see prices falter in coming months, along with the latest median home listing and sales prices from Realtor.com.