With tariffs threatening to jack up prices on everything from coffee to Shein jeans, here’s a surprising silver lining: The Big Kahuna of all purchases, a house, may finally be getting more affordable. That is, if you know where to shop.
Although real estate prices have remained stubbornly high at $424,900 nationwide, if you zoom in to the ZIP code level, it’s a different picture. When Realtor.com compared the cost of homes in Q1 of 2025 to the same period in 2024, it found 10 neighborhoods where list prices have dropped by 25%.
These bargain-basement gems are hiding across the US, but one common theme ties them together: A glut of homes for sale has pushed sellers to slash their prices.
“ZIPs where inventory has started to build up, as is the case in much of the South, could see prices fall as sellers look to attract buyer attention,” explains Realtor.com economist Hannah Jones.
The future of home prices
With some Wall Street execs sounding the alarm that we may be heading toward a recession, home prices could fall even further. But even then, real estate experts don’t think they’ll plummet across the board.
“I don’t think home prices are going to go down across the country anytime soon, and there are strong reasons for that,” says Alexei Morgado, a real estate agent in Florida and founder of real estate exam prep company Lexawise. “The biggest is the deep shortage of housing inventory. Some estimates say we face a deficit of several million housing units, and this keeps prices high.”
And because housing supply varies significantly by area, “The impact of a recession on housing prices would be felt unevenly,” predicts Jared Antin, managing director/associate real estate broker at Elegran Forbes Global Properties. “In secondary and tertiary markets, many of which overheated during the pandemic, we’re already seeing signs of price softening as buyer demand pulls back and inventory rises.”
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A recession could also bring down mortgage rates, encouraging some buyers and sellers to enter the market, although it will depend on whether they’re still feeling secure with their jobs and stock portfolios should the economy begin to struggle.
How to navigate a housing market downturn
Although buyers may rejoice at lower home prices, homeowners and sellers aren’t so enthused. In particular, investors with short-term rentals may be feeling pinched right now, says Kristen Conti, a broker with Peacock Premier Properties in Englewood, FL.
“There is an overabundance of Airbnb and VRBO properties, and many of those owners are now upside-down and unable to make adequate returns,” Conti says. “As investment property owners start offloading, it will put more downward pressure on properties.”
If a recession hits, Conti is prepared and plans to shift her focus to working with homeowners who are struggling financially and may be desperate to downsize.
“The FHA [Federal Housing Administration] is reporting higher rates of default than we have seen in many years, with expectations that these will continue to climb,” she explains. “I do outreach to these people who are in trouble and help them get out of their homes into something more affordable as opposed to foreclosure.”
Bottom line: Though a recession could usher in lower home prices in some places, it could also drag in a heaping portion of financial pain and suffering. Conti still remembers the 2008 recession and hopes never to repeat that experience.
“We were highly leveraged just before the last recession and sustained significant losses,” she recalls. “That was the beginning of the end. It was like the music stopped, and not everyone had a chair. While this period was a time of experiencing failure in a very real way, we were able to save hundreds of families from foreclosure. Now we only invest in what we know we can carry no matter what the market condition.”