During the pandemic, home sellers had the upper hand as crowds of buyers competed for a limited number of properties. But there are signs that the tide is turning, as a growing number of sellers are now slashing prices.
About 1 in 7 listed properties had a price reduction in June — roughly double from a year earlier, according to Realtor.com. Some of the hottest markets during the health crisis are now witnessing some of the deepest price cuts, with nearly 1 in 4 properties in Austin, Texas seeing a price drop and approx. 1 in 5 homes in Phoenix and Las Vegas see a reduction. report found.
The price cuts come as home buyers face a price squeeze. On the one hand, the median listing price hit a new high of $450,000 in June — a number that is unaffordable for many households. At the same time, loan costs have increased, which makes it more expensive to finance a mortgage.
More sellers are listing their properties this summer in hopes of getting lucrative bids, easing inventory levels – and putting some price pressure on sellers.
“[A]As many homeowners rushed into the summer ready to list their properties and capture the equity caused by record high prices, inventory has improved,” George Ratiu, an economist at Realtor.com, noted in a tweet. “This provided a welcome entry into this year’s property markets — price cuts.”
However, it could be a disadvantage for buyers if some owners put off listing their home because of these trends, Ratiu warned.
“As the number of new listings softens, it raises concerns that the nascent improvement in inventory may prove elusive,” he said.
In May, housing affordability across the United States hit its lowest level since July 2006, when home values soared before the crash that triggered the Great Recession of 2008, according to the Wall Street Journal, citing the latest data available from the National Association of Realtors.
Eight of the 10 cities with the biggest price declines in June had experienced higher-than-average price increases during the pandemic, except for Sacramento and Colorado Springs, Realtor.com said.
Below are the 10 cities with the largest share of price cuts among listed properties in June, according to Realtor.com.
- 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%