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More than half of sellers lowered their asking prices last month in three major U.S. cities as some of America’s once-hottest housing markets were hit especially hard by the ongoing slowdown in real estate.
Nearly 62 percent of houses for sale in Boise, Idaho, had a price drop in June, the most dramatic figure recorded in any major U.S. metro, Redfin disclosed Thursday in a new report.
Price drops hit 55 percent of homes in Denver and 52 percent of homes in Salt Lake City, the report reveals.
This time last year, a mere 26 percent of homes for sale in Boise had to resort to a price cut. Since then, the share of listings with price drops rose faster there than in any other big- or mid-sized metro area in the nation.
The downward pressure on sale prices in this pandemic migration hotspot was driven by a market slowdown far deeper than any other major metro area. For every 10 homes in Boise that went pending in May of last year, a mere six went pending in May of this year, according to a separate Redfin report last week.
The next-closest drop in pending homes that month occurred in San Jose, where eight homes went pending in May for every 10 that sold the same time last year.
The latest numbers reveal how the ongoing cooldown of the housing market has affected sellers, many of whom have found in recent weeks that their initial asking price overshot the actual amount for which their home could quickly sell.
For many buyers, today’s higher mortgage rates make these all-time high sale prices a tough pill to swallow — especially amid this uncertain economic environment, Redfin Senior Economist Sheharyar Bokhari said in the report.
“Home sellers are contending with a rapidly changing market, especially in places where they’re used to their neighbor’s homes getting multiple offers and selling for more than asking price,” Bokhari said. “Sellers are adjusting their expectations in real time as they realize they may not get the price their neighbor got two months ago.”
The downward pressure on home prices affected broad swaths of sellers in other once-hot markets as well.
Sacramento, Seattle, Portland and Tampa each saw nearly half of homes for sale undergo a price cut in June. The same was true for Indianapolis and Grand Rapids, Michigan.
The vast majority of markets in Redfin’s analysis — roughly 3 in 4 — had at least 25 percent of homes undergo a price drop last month.
Even in El Paso, Texas — the market with the fewest price cuts in the nation — 13 percent of sellers had to step back from their initial asking price.
And over the last year, nearly every major city in the nation has seen the share of homes with price drops expand.
The main pocket of exceptions to this rule resides in Illinois, where price drops declined year-over-year as a share of homes for sale in the Chicago, Elgin and Lake County markets. This share also declined year-over-year in Fresno, California.
But in the rest of the country’s major cities, Bokhari said many sellers are behind the ball in recognizing the ongoing change in buyer appetites.
“If demand plateaus in the coming months, price cuts are likely to be less common as sellers realize the market has shifted and price realistically from the start,” Bokhari said in the report. “But if demand falls further, sellers will continue to play catch-up and cut prices to attract buyers.”
