Struggling urban areas, traditionally bustling with activity, are now showing the clearest signs of an impending housing market crash. Sellers, desperate to attract buyers, are cutting the prices of almost a third of the homes in these previously thriving cities.
A recent report from Realtor.com reveals that nearly 20% of homes experienced price reductions in September, with some cities more severely affected than others.
Leading the way in price cuts are Portland, Denver, and Indianapolis, where these liberal regions have turned into hotbeds for ‘for sale’ notices and significant discounts. In these areas, about one-third of listings have seen price reductions.
Portland, recognized for its progressive stance, has struggled with rising crime and homelessness, especially post-pandemic. The city’s decline started when it became the first to decriminalize drugs in 2021.
Consequently, potential property buyers feel uncertain, avoiding investments in areas perceived as unsafe, which has led to reduced demand and falling home prices.
Portland’s median home price dropped to $599,000 in September, down one percent from the same time last year.
Vacancies in commercial and office buildings have also climbed, reducing the number of workers who need housing, further weighing on the market.
The situation is similar in Indianapolis and Denver. Although, according to a local realtor in Indianapolis, the primary pressure is from new housing developments and builder incentives, prompting owners of older homes to decrease prices to remain competitive.
Portland is one of the cities that has seen the most major price cuts
Almost one third of all houses on the market in Portland were discounted amidst concerns over affordability and crime in the city
Indianapolis realtor Josh Dilmaghani explained that a surge in new home construction is putting pressure on existing homeowners trying to sell.
‘Another major factor, at least in Indianapolis, is the amount of new construction —probably too much, in my opinion,’ he said. New home builders often offer financing incentives to buyers.
‘For example, if I’m selling my home for $300,000, that’s all I can offer. But a builder like Lennar or D.R. Horton might list at $350,000 and buy down the buyer’s interest rate, making the monthly payment comparable — or even lower — than buying my used home. To compete, I have to drop my price.’
Dilmaghani added that despite these challenges, ‘I’d still say Indianapolis is a top 10 major housing market in the country right now, depending on how you measure it. Homes are still moving here, and that’s not the case everywhere.’
Like Portland, Indianapolis struggles with higher crime rates compared to the national average, with an overall rate of 63.67 versus 33.37 nationwide. Median home prices dipped to $323,250 in September, reflecting decreased demand.
Aside from crime, the cooling of Indianapolis’s housing market is also a result of higher mortgage rates, affordability challenges, limited inventory, investor competition, and broader economic factors. These elements have collectively led to decreased buyer activity and longer time on the market for sellers.
Denver also has relatively high crime rates compared to national averages. The Colorado capital city has a strong rental market, which explains the lack of demand coming from buyers and the drop in house prices.
Denver saw a 1.8 percent decrease in home prices compared to the previous year — with a median home price of $599,450.
Indianapolis saw house prices drop at an astonishing rate
Around one third of houses in the Indiana state capital were discounted in September
The issue of price slashes comes down to markets simply having too many homes for sale and not enough buyers.
Overall, there are 17 percent more homes on the market this year compared to last — though, this isn’t a pattern seen across the country.
‘Price reductions have become one of the clearest signals of change and of movement in a more buyer-friendly direction,’ Realtor.com Senior Economist Jake Krimmel told the Daily Mail.
‘Taking the longer view, more listings in 2025 have seen price cuts than in any year since the pandemic, and certainly since mortgage rates surged in 2022 and demand cratered.’
Krimmel continued: ‘This summer’s housing market has been marked by regional divergence, with the South and West softening while the Northeast and Midwest stayed resilient. However, price cuts stand out as one of the few trends uniting markets nationwide.
‘Rising inventory, longer time on market, and affordability pressures are pushing sellers everywhere to reset expectations and begin to price accordingly.’
The South and West are seeing big increases in homes — even above pre-pandemic levels. Cities such as Denver, San Antonio, and Austin have way more homes than before COVID hit.
There were fewer homes for sale during the pandemic because buyers were rushing to take advantage of record-low mortgage rates, meanwhile building slowed down and many people were reluctant to move due to general uncertainty.
Denver, CO, was hit by significant home price slashes in September
Pictured: Jake Krimmel, Realtor.com Senior Economist
Now, people who held off listing their properties during COVID are selling, especially as the market cools and homeowners want their house sold before prices drop even further.
At the same time, builders have over-developed in areas that were high in demand during the pandemic — particularly Florida, where people rushed for warm weather, bargain prices, and an ideal lifestyle.
Florida, along with other Southern areas that became pandemic hotspots, are home to metros seeing the most major price cuts.
Austin, TX, saw 27.6 percent of homes in the metro area drop their asking prices, Dallas saw 25.5 percent do so, and Tampa, FL, saw 26.8 percent.
Cheaper and mid-priced homes are more likely to have price cuts in these areas, while expensive luxury homes usually stay at full price.
‘What we’ve uncovered is that price reductions are more common at the lower end of the market, while higher-priced sellers are more likely to hold firm,’ Krimmel said.
‘That helps explain why median prices nationally and in many metros look steady even as buyers at more affordable price points are seeing more room to negotiate.
‘At the top, sellers often have more equity, flexibility, or are selling vacation properties, giving them the option to wait out the market rather than cut. These sellers are choosing patience over price cuts.
Denver has a strong rental market, which indicates that residents are more comfortable renting than buying at the moment
Metro areas in the South are also seeing price cuts – especially cities, like San Antonio, that became popular house-buying spots during the pandemic
‘At the bottom, sellers do not have that luxury and also need to sell in order to buy. So they respond to market signals more quickly,’ he explained.
The widespread discounts being seen across the country have hit just as the prime time to purchase a house looms.
Real estate agents determined that the best period to buy a home is October 12-18, based on past trends.
On top of price cuts and plenty of options, buyers also have more time to make up theirs minds and explore options, as homes are staying on the market longer on average.
This autumn is certainly a great time to be a buyer, but recent housing trends are not excellent signs for the market in general.
What we are seeing right now is a significant cooldown, which doesn’t necessarily mean there will be a crash — but it does open up the possibility.
The warning signs are weakening demand (illustrated by sellers not being able to get their asking prices), rising inventory, and homes sitting longer on the market.
For a full-on housing market crash, like in 2008, there would need to be high unemployment rates, mass foreclosures, and credit tightening (lenders getting pickier about who they lend to).
