Daniel Acker | Bloomberg | Getty Images
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More home sellers are lowering their asking prices as rising mortgage interest rates and inflation have slowed competition in the housing market.
Some cities are seeing more price drops than others. Boise, Idaho, took the lead in June, with 61.5% of sellers reducing their asking prices, according to a new report from Redfin, a real estate agency.
Boise was one of the hottest pandemic markets as the work culture anywhere prompted thousands to flee from more expensive markets like San Francisco and Los Angeles. A year ago, about a quarter of Boise sellers lowered their prices.
Top 10 markets experiencing declines in asking prices:
- Boise, Idaho : 61,5 %
- Denver, Colorado : 55,1 %
- Salt Lake City, Utah : 51,6 %
- Tacoma, WA: 49.5%
- Grand Rapids, Michigan : 49,3 %
- Sacramento, Californias: 48.7%
- Seattle, Washington : 46,3 %
- Portland, Oregon : 45,7 %
- Tampa, Florida: 44.5%
- Indianapolis, Indiana : 44,1 %
Many of these markets saw massive price increases during the pandemic that simply weren’t sustainable as interest rates rose. The average 30-year fixed mortgage rate is now nearly double what it was at the start of this year. This makes the cost of ownership considerably higher.
Boise has seen its home prices skyrocket more than 60% from pre-coronavirus levels. Nationally, house prices are up about 39% from March 2020, when Covid was declared a pandemic, according to the S&P Case-Shiller Index.
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“Higher mortgage rates and a potential recession are causing would-be buyers in popular migration destinations to press the pause button, and they are also having a big impact on workers in major job centers who are relying on their wallets. shares for installments,” Sheharyar said. Bokhari, chief economist at Redfin.
The competition is also cooling down because there is now an increasing supply in the market. Inventories hit an all-time high during the pandemic, but now, as homes sit longer and demand recedes, they are finally rising. Active inventory was up 28% last week compared to the same week a year ago, according to Realtor.com.
Real estate markets remain undersupplied compared to 2019, but they are moving in the right direction. Yet housing remains much less affordable than it was before the pandemic. For a household with an income of $75,000, only 23% of homes on the market are affordable today, compared to 50% of inventory in 2018, according to Realtor.com.
“While these trends translate into a cooler-than-usual summer home-buying season, the way forward points to a promising shift away from the severe undersupply of 2021 and winning competition at all costs,” said George Ratiu, senior economist at Realtor.com. .
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