During the pandemic, home sellers had the upper hand as droves of buyers competed for a limited pool of properties. But there are signs that the tide is turning as a growing number of sellers are now slashing prices.
About 1 in every 7 listed properties had a discount in June — about twice as much as a year earlier, according to Realtor.com. Some of the hottest markets during the health crisis are now seeing some of the deepest price drops, with nearly 1 in 4 properties in Austin, Texas seeing a price drop and about 1 in 5 homes in Phoenix and Las Vegas seeing a price drop, the report found.
The price cuts come as homebuyers face an affordability squeeze. On the one hand, the median list price hit a new high of $450,000 in June – a number that is prohibitive for many households. At the same time, borrowing costs have skyrocketed, making financing a mortgage more expensive.
This summer, more sellers are listing their properties in hopes of attracting lucrative bids, which is reducing inventories — and putting some price pressure on sellers.
“[A]As many homeowners rushed into the summer to list their property and take advantage of the equity raised by record prices, inventory has improved,” noted George Ratiu, economist at Realtor.com, in a tweet. “This was welcome confirmation of this year’s property markets – price cuts.”
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However, there could be a downside for buyers if these trends hold back some owners from listing their home, Ratiu warned.
“As the number of new registrations slows down, there is concern that the beginning improvement in inventory could prove elusive,” he said.
In May, US housing affordability hit its lowest level since July 2006, when home prices soared before the crash that triggered the Great Recession of 2008, according to The Wall Street Journal, citing the latest available data the National Association of Brokers.
Eight of the 10 cities with the biggest price cuts in June had seen above-average price increases during the pandemic, with the exception of Sacramento and Colorado Springs, Realtor.com said.
Below are the 10 cities with the largest share of listed home price drops in June, according to Realtor.com.