Housing Market in Tech Hubs Cooling Faster Than Other Parts of US: Report

A 'For Sale' sign is posted outside a residential home in Seattle, Wash., on May 14, 2021. (Karen Ducey/Reuters)

Housing markets in tech hubs and pandemic-migration hotspots are cooling faster than other parts of the United States amid a wave of layoffs in the technology sector and elevated mortgage rates, according to real estate broker Redfin Corp’s report on Monday.

Redfin round out the top 10 metropolitan areas that cooled the fastest based on how quickly measures of home-buying demand and competition cooled between February 2022 and February 2023.

Austin, Seattle, San Jose, and Phoenix are among the metros most affected by the slowdown as high mortgage rates, turmoil in the tech sector, and unavailability of homes deter buyers, the report said.

These are the top 10 cities where housing markets are cooling the fastest in 2023:

1. Austin, Texas
2. Seattle, Washington
3. Phoenix, Arizona
4. Tacoma, Washington
5. Denver, Colorado
6. Las Vegas, Nevada
7. Stockton, California
8. San Jose, California
9. Sacramento, California
10. Oakland, California

Decades-high inflation leading to interest rate hikes, weak consumer demand, and the possibility of an economic slowdown have forced big tech firms such as Amazon and Meta, as well as banks, to trim their workforce.

Layoffs in the tech industry, concentrated largely in the Bay Area and Seattle, have led to some buyers bowing out of their search for a home or cancelling contracts, Shelley Rocha, a Redfin manager, wrote in the report.

Market Outlook

The collapse of Silicon Valley Bank earlier this month, which lent money to many Bay Area startups, is having a mixed impact on the local housing market, the report stated.

Redfin agents report that uncertainty around the stability of the banking and tech industries is exacerbating nerves in some buyers and sellers.

The New York metropolitan area is likely to feel the impact of banking turmoil as many of its residents work in the financial sector, according to the report.

According to Nerdwallet, about one-third (32 percent) of Americans feel more pessimistic about their ability to purchase a home in 2023 than in 2022 based on factors such as the economy, mortgage rates, and home prices.

“Homebuyers haven’t caught a break since the beginning of the pandemic,” says Holden Lewis, Nerdwallet Home and Mortgages expert, as Nerdwallet reported.

“Competition among buyers was fierce in 2020 and 2021, and then mortgage rates skyrocketed in 2022. The housing market finally might be friendlier to buyers in 2023. Mortgage rates could fall, and home prices might decline in some places,” he said.

Reuters contributed to this report.