Top 10 US Real Estate Markets to Avoid for Now

National real estate trends can be a helpful indicator, but local conditions may differ. That is why it is essential to monitor specific areas where you plan to invest.

Though home prices have begun to decrease, there are certain key US real estate markets you should still avoid for the time being.

1. Miami

Miami, located on the Southeast tip of Florida peninsula, is a top vacation spot with stunning beaches, perfect weather, and vibrant culture. It has also become an increasingly popular destination for immigrants from around the globe.

Due to this, Miami's real estate market is overflowing with rental properties. This presents investors with a great chance to build an impressive rental property portfolio.

However, price appreciation in Miami has reduced profit margins on flips. Nevertheless, a well-built rental property portfolio remains the most profitable investment strategy given today's market conditions.

2. Los Angeles

Los Angeles, California is an enticing investment market with plenty to offer investors. Its vibrant economy is one of the primary reasons for this appeal.

However, this market is relatively expensive compared to most others in the US, so it may not be wise to rush in and purchase anything right away.

Thankfully, the LA real estate market has seen some improvement over the last few months. Home prices have been increasing at a slower pace and bidding wars are no longer as frequent.

As long as the LA housing market keeps expanding at a moderate rate, it should remain one of the country's premier markets for years to come. If you're thinking about investing in real estate here, make sure you do your due diligence!

3. San Francisco

For first-time homebuyers or real estate investors looking for a secure long-term investment, San Francisco is one of the best cities to consider. It has been an excellent place to buy a home over the past ten years and forecasts indicate it will continue being an attractive market going forward.

Prices are expected to increase over the coming year as buyers continue to battle for scarce housing inventory and 30-year mortgage rates continue rising. Nonetheless, this does not guarantee prices will return to pre-pandemic levels.

4. Seattle

Seattle is a vibrant, modern city that attracts tech workers from around the country and beyond. While its growing economy has fostered development, Seattle faces its own unique challenges.

Redfin, a technology-driven real estate company, has identified Seattle's housing market as slowing down faster than any other US real estate market in US history. This is due to rising mortgage rates, inflation and a weakening stock market.

This cooling trend is expected to reduce competition and give buyers more bargaining power. Unfortunately, it could also result in a slight decline in home prices over the next 12 months.

5. Atlanta

Atlanta is a bustling metropolitan area with affordable home prices. Boasting an active economy, tree-lined neighborhoods and vibrant culture, Atlanta attracts both newcomers and longtime residents alike.

Real estate investors consider affordability of homes a critical factor. Kiplinger rates the housing affordability of each market on a scale from 1 to 10, with 10 being the least affordable.

Atlanta currently ranks 23rd out of 50 largest metro areas for housing affordability in the US. Furthermore, 50% of households rent rather than own, making this an appealing market for investors.

6. Boston

Boston is one of the most desirable housing markets in America. It boasts numerous universities and colleges, as well as bustling businesses.

However, affordable housing in Boston is becoming a serious problem. Many people are being forced to rent rather than buy property.

This has caused an uptick in rental demand, making the market ideal for investment properties.

Boston boasts an abundance of students and young professionals, making it a prime target for investors looking to target this group. If you are considering purchasing investment property in Boston, do your research and select a property that will meet their demand.

7. Houston

Houston has long been a top choice for new and young families searching for an affordable place to live. While Houston was severely damaged by Hurricane Harvey in 2017, it is recovering and continues to attract new residents.

Many are moving to Houston for jobs and a low cost of living, which has driven up housing demand. Unfortunately, interest rates have recently gone up, making it harder for some homebuyers to afford properties in Houston's real estate market.

In addition to the recent federal reserve rate hike, there are other factors that could have an adverse effect on Houston's real estate market. Let us examine some of these and see how they might influence housing prices in 2023.

8. Denver

Denver, the capital city of Colorado and one of the hottest real estate markets in America, lies along the Front Range urban corridor between the Rocky Mountains to the west and High Plains to the east.

Denver enjoys a mild, sunny climate with average summer temperatures in the 80s and nights that are crisp and cool. This makes Denver an ideal place to live and work.

Denver boasts a robust economy and vibrant job market that draw people from across the country. This has fostered steady population growth within the city limits, making it ideal for businesses as well as investors seeking long-term property investments.

However, the current housing crisis is prompting many buyers to reevaluate if they are still ready to buy. Prices have declined and inventory levels are low, creating a sellers' market.

9. Las Vegas

Home prices in Las Vegas have fallen faster this year than other markets, impacting both sellers and buyers alike. The drop is due to higher mortgage rates and decreased demand.

Las Vegas remains one of the nation's top real estate markets, even with recent price decreases. Renowned for its casinos, pool parties and shows, this city draws people from around the globe.

Tourism is not the only industry flourishing in the city; other sectors such as technology and healthcare are also flourishing there. Attracting people to this area due to its friendly business climate, lack of state income tax, and diverse job market has proven popular over time.

10. San Diego

Mortgage rates are expected to increase in 2023, leading to the cooling off of some US real estate markets such as California, Texas, New York, New Jersey and Hawaii.

San Diego has seen one of the fastest-rising housing markets during the pandemic, but that may be coming to an end. Rising interest rates have priced many out of the market and job losses have forced many homeowners into foreclosure proceedings.

Given all these considerations, it's essential to keep an eye on the housing market before investing in any property. Doing this can help you avoid any unpleasant surprises or losses in the future.