Home sellers prevailed during the epidemic as hordes of buyers fought over a small number of available properties. However, there are indications that the tide is shifting as more sellers are already lowering their prices.
According to Realtor.com, roughly 1 in 7 listed houses had their prices reduced in June, which is more than double the rate from a year earlier. The survey revealed that some of the markets that were the hottest during the health crisis are now seeing some of the biggest price reductions, with nearly 1 in 4 houses in Austin, Texas, and approximately 1 in 5 homes in Phoenix and Las Vegas experiencing a decrease.
The price reductions occur as homebuyers struggle with affordability. On the one hand, the median listing price hit a record high of $450,000 in June; nonetheless, this amount is out of reach for many households. The cost of financing a mortgage has increased at the same time that borrowing costs have increased.
This summer, more sellers are putting their homes on the market in an effort to attract high offers, which is reducing the supply of available properties and increasing the pressure on prices for sellers.
“[A]s many homeowners rushed into summer ready to list their property and capture the equity brought about by record-high prices, inventory has improved,” noted George Ratiu, an economist at Realtor.com, in a tweet. “This brought a welcome sign in this year’s real estate markets — price cuts.”
However, Ratiu warned that there can be a drawback for purchasers if some owners decide not to offer their home as a result of those tendencies.
“As the number of new listings softens, it raises the concern that the nascent improvement in inventory may prove elusive,” he said.
According to the Wall Street Journal, which used the most recent data available from the National Association of Realtors, housing affordability in the United States decreased in May to its lowest level since July 2006, when home values were rising before the crash that precipitated the Great Recession in 2008.
Except for Sacramento and Colorado Springs, eight of the ten locations with the largest price drops in June experienced higher-than-average price growth during the epidemic, according to Realtor.com.
According to Realtor.com, the ten cities with the highest percentage of price reductions among homes listed in June are listed below.
- Reno, Nevada: 32.4% of properties had price cuts
- Austin, Texas: 32.4%
- Phoenix, Arizona: 29.5%
- Anchorage, Alaska: 28.5%
- Boise, Idaho: 28.4%
- Ogden, Utah: 27.4%
- Sacramento, California: 25.2%
- Colorado Springs, Colorado: 25.1%
- Evansville, Indiana: 24.7%
- Medford, Oregon: 23.2%