Navigating the housing market in 2025 requires a sharper eye than ever. While some areas continue to see steady or even rising prices, others are flashing warning signs that a steep decline could be around the corner. Oversupply, affordability challenges, and shifting migration patterns are combined in specific cities to create a perfect storm. This list outlines ten locations across the United States most likely to see home values drop next, giving potential buyers and investors insight into where caution may be warranted.
Cape Coral, Florida
Cape Coral has been one of the hardest-hit markets recently, with sharp pullbacks in buyer interest and a growing inventory surplus. What was once a pandemic-era hotspot for remote workers has quickly cooled, and sellers are cutting prices to keep up with falling demand. Homes sit on the market longer, and open houses draw fewer visitors than just a year ago.
The city’s vulnerability stems in part from speculative buying during the real estate boom, which pushed prices well beyond what the local economy could support. As interest rates rise and remote work trends settle, many prospective buyers are turning away from secondary markets like Cape Coral in search of affordability and job proximity. Without renewed demand, the downward price pressure is expected to intensify.
Denver, Colorado
Denver’s housing market has shifted quickly, transitioning from red-hot to ice-cold. Home prices that soared over the past five years are now facing headwinds, thanks to mounting affordability issues and a growing inventory. Listings have outpaced buyer activity, particularly in neighborhoods that had once been highly competitive.
As fewer people move into the area and local wages struggle to keep up with housing costs, the real estate correction is becoming harder to ignore. Denver’s popularity drove many investors to snap up properties at inflated prices. Still, the reality of high monthly payments and fewer qualified buyers pushes the market into a downward trend that may not soon reverse.
Colorado Springs, Colorado
Just down the highway from Denver, Colorado Springs mirrors many of the same problems. Homeowners who bought at peak prices are seeing less equity growth while new listings are starting to accumulate. The demand that once came from military families and remote workers is showing signs of decline.
Coupled with elevated mortgage rates, the local market is beginning to show cracks. More sellers are lowering their asking prices and offering concessions just to get contracts signed. Colorado Springs could be looking at a sustained downturn if this trend continues into the second half of 2025.
