U.S. housing prices started their steady rise during the pandemic and have only come down in a handful of cities this year. Indeed, the seemingly unstoppable upward march of home prices has kept out many would-be homebuyers, who find themselves unable to save for a down payment, let alone handle 7% or higher mortgage rates. 

But it’s not just the locked-out renters who are suffering in today’s housing market. Many homeowners who managed to break into the market last year as prices ballooned are now facing a new obstacle: homes that are already losing value even as mortgage rates surge higher, according to a late November report from real-estate search portal Point2.

Using data from Redfin, Zillow, local MLS systems, and brokerages, Point2 found that price corrections are “pummeling” condo owners in 36 cities and single-family home owners in 25 of the 100 largest U.S. cities. A CoreLogic report from early December also shows that 1.1 million homes in the U.S. have negative equity.

“While it’s true that certain markets have seen home prices rise this year, our study primarily focuses on homeowners who faced challenges in purchasing homes last year, only to witness a subsequent decline in the values of both condos and single-family homes in their respective cities,” a Point2 spokesperson tells Fortune. “This discrepancy can be attributed to several factors, including market corrections, inventory levels, and the impact of rising mortgage rates.”

Price drops concentrate in the West

To calculate home value depreciation, Point2 compared condo and single-family home prices from September 2022 to September 2023 and determined year-over-year price changes for both property types. 

Large western cities saw the biggest value drops, namely San Francisco; Oakland, Calif.; Las Vegas; Colorado Springs, Colo.; Austin, and San Antonio. Homeowners in these cities are taking the biggest hit at both ends of the housing market—first when they bought, and now if they’re trying to sell.

“This double-blow market means that the most newly minted owners were first hit by the highest home prices in history, only to be cut off from building wealth by the current falling prices,” according to the report.  

San Francisco recorded the highest net loss for condo prices, down 10.6% from last year, for a median loss of $122,500. Memphis recorded the largest drop in single-family home prices, at 12.2%. The median single-family home in Memphis as of September 2023 cost $170,000, down from $205,000 last year, according to Point2. 

Some 16 cities saw drops over $10,000 in median single-family home prices, according to Point2’s analysis, while nine more cities (including New York City; Long Beach, Calif., and Oklahoma City) recorded “subdued drops” of one or two percentage points. In seven other cities, single-family home prices didn’t budge, according to the report.

A drop in home values spells bad news for current homeowners—but mostly only if they’re looking to sell soon. A loss in home equity coupled with mortgage rates that are even higher today than a year ago can keep current homeowners who would prefer to move locked into their current home. It’s also an issue for sellers looking to recoup their investments, says Dave Flanders, owner and founder of Burlington, Conn.-based real estate company HomeVisors Collective, “particularly if they bought at peak prices.”

“Certain markets are indeed experiencing significant drops in property values, particularly in cities where prices skyrocketed unnaturally during the pandemic,” Flanders tells Fortune. “For home buyers, this could mean more affordable opportunities, especially in previously overheated markets. Sellers, on the other hand, might face challenges in recouping their investments, particularly if they bought at peak prices.”

Could lower home values be here to stay?

Still, would-be buyers hoping to see lower prices spread might find themselves disappointed. Dan Green, CEO of Cincinnati-based mortgage company Homebuyer.com, notes that home prices are down in only a “few select cities,” while growth in the Midwest, Northeast, and other “inventory restricted” markets remains solid.

“There’s a lot of pent-up demand for housing,” he tells Fortune. “Rising rates pushed a lot of buyers into a wait-and-pounce mode. As prices come down, more of that pent-up demand is released. Combine it with falling mortgage rates, and it’s hard to imagine a sustained price drop happening anywhere.”

The Point2 spokesperson says that home price trends are influenced by a number of factors, inventory levels, and mortgage rates, making it difficult to predict prices in the coming year. 

Either way, it’s important for prospective buyers to remember that housing market trends are just that—trends. It’s key to understand the local market in which you’re looking to buy instead of relying on national trends, experts agree. It’s also important for sellers to keep an eye on local market conditions to figure out the best time to put their home on the market so that they can avoid major losses.

Looking to next year, home prices could stabilize as the market corrects itself from the “rapid increases” from the past couple of years. For now, though, issues with negative equity will continue to affect how buyers and sellers approach the market—and especially a seller’s “exit strategy,” Marisa Simonetti, managing owner of a Minneapolis-based real estate firm, tells Fortune. Exit strategies could include selling a home for a profit or using the property as a rental.

Without an exit strategy, negative equity can hurt sellers who need to move on short notice. They “may be forced to bring money to closing or rent a property that negatively cash flows each month,” she says. 

Any speculation about whether home prices may rise or fall can “put one in the danger zone,” she warns. “Always purchase a home with the most positive possible exit strategies in mind.”

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Original: Fortune | FORTUNE: Some homeowners who managed to buy last year are bleeding money—the worst hit have lost more than $122,000 in home value with price corrections “pummeling” dozens of cities