US Home-Sellers Forced to Drop Prices as Real Estate Market Loses Steam
Home-sellers across the metro US are slashing their asking price, as the Fed’s panicked tightening cycle sends shivers across US metro real estate markets.
Data compiled by Redfin shows that home owners are substantially reducing their asking prices, indicative of a broader real estate market that is losing steam from historically elevated demand brought on by the pandemic. The real estate company, which analyses 97 metro areas around the US, found that over three-quarters of the regions surveyed reported that more than 25% of home-sellers reduced their asking price in June.
“Home sellers are contending with a rapidly changing market, especially in places where they’re used to their neighbours’ homes getting multiple offers and selling for more than asking price,” explained Redfin senior economist Sheharyar Bokhari. In Boise, Idaho, for example, almost two-thirds of listed properties saw their price drop last month, followed by Denver and Salt Lake City, where 55.1% and 51.6% of homes had a price drop.
Metro regions such as Boise and Salt Lake City became rapidly popular real estate markets, as those working in expensive coastal areas relocated amid ultra-low mortgage rates and remote work opportunities. With an already-constrained supply and onslaught of demand, home prices shot up so sharply they became unaffordable for the average prospective homebuyer.
Now, though, with mortgage rates on the rise and a potential recession looming on the horizon, homebuyers are hitting the pause button on major purchases. “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,” added Bokhari. “But if demand falls further, sellers will continue to play catch-up and cut prices to attract buyers.”
Information for this briefing was found via Redfin.com. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.