The 10 U.S. Cities With Biggest House Price Declines
David Garner
U.S. Cities with the Biggest Home Price Declines: A Strategic Guide for International Investors
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For international investors navigating the U.S. real estate market, understanding where home values are declining is as crucial as knowing where they’re rising. While many markets have experienced sustained growth, specific major U.S. cities have seen significant single-family home price drops from their peaks through May 2025. This presents both a warning and, for highly specialized global property investors, potentially unique opportunities.
This article delves into the latest analysis, identifying the 10 big U.S. cities with the most substantial home price declines. We’ll explore the extent of these drops, the underlying market dynamics, and crucially, what these trends mean for your U.S. property investment strategy, particularly regarding consistent cash flow and risk management.
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Key Takeaways: Major U.S. Cities with Home Price Declines for International Investors
- Significant Declines: Ten major U.S. cities have experienced single-family home price declines ranging from 8% to over 22% from their mid-2022 peaks through May 2025.
- Sun Belt & West Coast Impact: Cities in the Sun Belt (like Austin) and on the West Coast (like Oakland and San Francisco) dominate the list of declines, after experiencing rapid price surges during the pandemic.
- Buyer’s Market Indicators: These declines are often accompanied by increasing inventory and a shift in market power towards buyers.
- Caution for Most Investors: For most international investors focused on stable consistent cash flow, these markets may pose higher risks due to potential for further depreciation and challenging rental dynamics.
- Niche Opportunities: Highly experienced property investors with expertise in distressed assets or aggressive value-add strategies might find niche opportunities in these markets, but with heightened risk.
- Prioritize Due Diligence: Rigorous market analysis and a deep understanding of local economic drivers are paramount before considering any investment in these declining areas.
- DSCR Loans for Prudent Leverage: If considering investment in such markets, specialized financing like DSCR loans allows for careful underwriting based on the property’s income-generating potential, reducing reliance on personal credit.
Related: Your Essential Guide to U.S. Taxes for Non-Resident Real Estate Investors
The Downturn in Major U.S. Housing Markets (Through May 2025)
While the national narrative on U.S. home prices appears stable, a closer look at specific metropolitan areas reveals a stark reality: significant price corrections are underway in several major cities. These declines are particularly pronounced in areas that saw rapid and, arguably, unsustainable price surges during the pandemic era.
According to a recent analysis by Wolf Richter on WolfStreet.com, a clear picture emerges of markets experiencing notable contractions:
- Period of Decline: The data tracks price declines from their respective peaks in mid-2022 through May 2025.
- Data Source: The analysis utilizes the Zillow Home Value Index (ZHVI) for “mid-tier” single-family homes, with values seasonally adjusted as a three-month moving average.
- The “Heat Up” of Declines: The article highlights that in many of these cities, the pace of price decline is “heating up,” indicated by sharp month-to-month drops.
Related: The Best U.S. Property Markets for International Investors in 2025
Top 10 Big Cities with the Biggest Single-Family Home Price Declines (from Peak through May 2025)
The following table details the 10 major U.S. cities that have experienced the most significant price declines from their peaks in mid-2022 through May 2025, according to WolfStreet.com:
| Rank | City & State | Price Decline from Peak | Change from Prior Month (May 2025) | Change Year-over-Year (May 2025) | Increase Since Jan 2000 |
|---|---|---|---|---|---|
| 1 | Austin, Texas | -22.1% | Decline | Decline | Significant Gain |
| 2 | Oakland, California | -20.3% | Decline | Decline | Significant Gain |
| 3 | New Orleans, Louisiana | -18.1% | Decline | Decline | Significant Gain |
| 4 | San Francisco, California | -15.3% | Decline | Decline | Significant Gain |
| 5 | Phoenix, Arizona | -14.8% | Decline | Decline | Significant Gain |
| 6 | Detroit, Michigan | -13.6% | Decline | Decline | Significant Gain |
| 7 | Seattle, Washington | -12.9% | Decline | Decline | Significant Gain |
| 8 | Sacramento, California | -11.8% | Decline | Decline | Significant Gain |
| 9 | Las Vegas, Nevada | -9.5% | Decline | Decline | Significant Gain |
| 10 | Boise, Idaho | -8.3% | Decline | Decline | Significant Gain |
(Note: “Decline” indicates a month-to-month or year-over-year price drop; “Significant Gain” indicates large appreciation since 2000 despite recent drops. Data derived from WolfStreet.com, June 22, 2025, citing Zillow Home Value Index (ZHVI).)
Contextualizing the Declines:
- Austin’s Example: The article notes that Austin’s prices are now back to May 2021 levels, following a massive 64% increase between mid-2020 and mid-2022. This illustrates that current declines, while substantial, often follow periods of intense, unsustainable growth.
- Regional Concentration: The list is heavily concentrated in the Sun Belt and West Coast, regions that experienced some of the most dramatic price increases during the pandemic-era housing boom.
Related: Best U.S. Real Estate Markets for First Time Investors
Strategic Implications for International Investors
For international investors, these significant price declines carry dual implications: primarily as a warning, but for a very specific subset of investors, a potential niche opportunity.
Warning: Heightened Risk for Most Investors
For the vast majority of international investors seeking stable, consistent cash flow from U.S. rental properties, these markets present higher risks:
- Potential for Further Depreciation: Investing in a declining market means you could be catching a “falling knife,” with no guarantee that prices have bottomed out. This directly threatens your capital preservation and overall return.
- Challenging Rental Dynamics: While prices fall, rental rates may not decline proportionally or quickly enough to offset the depreciation. In some cases, oversupply (if previous construction was robust) could lead to weaker rental growth or higher vacancies.
- Illiquidity Risk: A declining market can become less liquid, making it harder and potentially more costly to sell a property if your investment strategy requires an exit in the near to medium term.
Related: Alabama’s Housing Market Bounces Back in May 2025
Niche Opportunity: For Highly Specialized Investors Only
For experienced global property investors with specific expertise and high-risk tolerance, these markets might offer very niche opportunities:
- Distressed Asset Acquisition: If properties become significantly undervalued due to foreclosures or highly motivated sellers, there could be opportunities for acquiring distressed assets at deep discounts. This requires extensive local knowledge, strong legal support, and often significant cash reserves.
- Aggressive Value-Add Strategies: Investors capable of executing substantial renovations or repositioning strategies might find opportunities to add significant value, aiming to exit when the market eventually recovers. This is a capital-intensive and high-management approach.
- Long-Term Contrarian Play: A select few may view these as long-term contrarian investments, buying into strong fundamental cities at a discount, anticipating a future rebound. However, this demands a very long investment horizon and strong financial resilience.
Crucially, for most international investors focused on predictable rental income and stable growth, avoiding these rapidly declining markets and instead focusing on more stable or growing “cash flow markets” (as discussed in our article on “Affordable U.S. States for Investors“) is the more prudent strategy.
The Role of Due Diligence and Expert Teams
Regardless of your strategy, engaging an expert local team and conducting exhaustive due diligence is paramount:
- Deep Market Analysis: Go beyond headline numbers. Understand local job markets, population trends, new construction pipelines, and rental market specifics for any area you consider.
- Local Professionals: Your U.S. real estate agent must have direct experience in distressed or declining markets if that’s your target. Your property manager’s ability to manage vacancies and attract quality tenants will be tested. Your U.S. tax advisor is critical for understanding tax implications of losses or gains.
- Financing with DSCR Loans: If you do pursue opportunities in these markets, DSCR (Debt Service Coverage Ratio) loans offer a flexible financing option for international investors. While the property’s income potential must still meet DSCR requirements, these loans can be crucial for leveraging capital without traditional income verification, allowing you to act on specific deals. (For more details, see: “DSCR Loans for International Investors: Your Definitive Guide”).
Related: The Best U.S. Mortgage Options for Foreign National Property Investors
Conclusion: Caution and Precision in a Correcting Market
The significant home price declines in these 10 major U.S. cities, as highlighted by WolfStreet.com, serve as a potent reminder of the regional variations within the U.S. housing market. For the majority of international investors prioritizing stable consistent cash flow and capital preservation, a cautious approach and focus on more predictable markets are advisable.
However, for a select group of highly experienced and well-resourced global property investors, these corrections may unveil highly specific, albeit higher-risk, opportunities for unique investment plays. Thorough due diligence, robust local partnerships, and a clear understanding of your risk appetite are essential for navigating this complex and evolving landscape.
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“Having personally invested in over 120 US rental properties from overseas, I know the true value of getting the right advice and support.
David Garner – Cashflow Rentals
GROW YOUR WEALTH WITH U.S. REAL ESTATE
Start your US real estate investment journey today, and book a Free 1-2-1 Discovery Call with a member of our senior management team.
“Having personally invested in over 120 US rental properties from overseas, I know the true value of getting the right advice and support.
David Garner – Cashflow Rentals
Frequently Asked Questions (FAQs) on U.S. Cities with Home Price Declines for International Investors
Here are answers to common questions international investors have about major U.S. cities experiencing home price declines.
Q: Which U.S. cities have seen the biggest home price declines recently?
A: According to WolfStreet.com, cities like Austin, Oakland, New Orleans, San Francisco, Phoenix, Detroit, Seattle, Sacramento, Las Vegas, and Boise have experienced the most significant single-family home price declines from their peaks through May 2025.
Q: How much have home prices declined in these cities?
A: Price declines in these top 10 cities range from approximately 8% to over 22% from their mid-2022 peaks through May 2025, with Austin seeing the largest drop at -22.1%.
Q: What is causing home prices to decline in these specific cities?
A: These declines often follow periods of rapid, unsustainable price growth during the pandemic. Factors contributing to the current declines include elevated mortgage rates, increased housing inventory, and a shift in market power towards buyers.
Q: Should international investors avoid these declining markets?
A: For most international investors focused on stable, consistent cash flow and capital preservation, these markets generally pose higher risks due to potential for further depreciation and challenging rental dynamics. Avoiding them and focusing on more stable markets is often a more prudent strategy.
Q: Are there any opportunities for investors in these declining markets?
A: For highly experienced and well-resourced property investors, there might be niche opportunities such as acquiring distressed assets at deep discounts or implementing aggressive value-add strategies. However, these approaches carry heightened risk and require extensive local expertise.
Q: How can DSCR loans be used in markets with declining home prices?
A: If an international investor chooses to pursue a high-risk, niche opportunity in a declining market, DSCR loans can still provide financing based on the property’s income potential. However, strict underwriting of the DSCR ratio remains crucial, and personal financial resilience is paramount to mitigate risk.
Q: What is the most important advice for international investors considering these markets?
A: The most important advice is to conduct rigorous, hyper-local due diligence. Partner with highly knowledgeable local U.S. real estate agents and property managers who understand the specific dynamics of declining markets and can provide realistic assessments of rental demand and long-term viability.
About the Author
David Garner has over 120+ personal property acquisitions in the U.S. real estate market as a Non-Resident Alien foreigner, bringing extensive practical experience to his insights. He specializes in guiding international investors through the complexities of the U.S. property landscape, focusing on cash flow opportunities, financing, and strategic wealth building. His deep understanding of the market, combined with his client-centric approach, makes him a trusted advisor for global investors seeking to establish and grow their U.S. real estate portfolio.
