Boons for Buyers: Here Are the 10 Cities Where Sellers Are Slashing Home Prices the Most

Boons for Buyers: Here Are the 10 Cities Where Sellers Are Slashing Home Prices the Most

Realtor.com

 

Boons for Buyers: Here Are the 10 Cities Where Sellers Are Slashing Home Prices the Most

Just a few months ago, home sellers were living the high life. Once they decided to list their homes, everything was smooth sailing all the way. They didn’t have to bother with fixing much of anything or staging rooms to look bigger or better. Heck, many didn’t even trouble themselves to clean their homes before opening them up to eager buyers. And yet many sellers were still receiving multiple offers well over the asking price from buyers, who were often waiving home inspections and every other conceivable contingency to nail down a deal.

The times, as they say, are a-changin’. Fast.

Buyers are now dropping out of the market like woozy midsummer flies due to record-high and still-rising home prices coupled with higher mortgage rates pummeling their inflation-battered budgets. Fears of another recession, stock market drops, and a growing sense of ennui over the state of the world are also sidelining buyers.

Sellers who watched as their neighbors’ homes—ones with kitchens and bathrooms that hadn’t been updated in decades—sold for record prices to all-cash buyers within days in the spring have been dumbfounded by the abrupt shift in the market. While some sellers across the nation are continuing to receive lucrative offers, others have been lucky to get an offer at or below their list price. That’s led those not quite so fortunate to slash their asking prices in hopes of attracting buyers.

So widespread price cuts have moved from rarities to standard operating procedure in some of the nation’s hottest real estate markets. But where are they happening the most? Realtor.com® set out to find the cities where the percentage of price reductions are the highest. These are the metros where sellers are pricing their properties the most out of step with what buyers are willing to pay for them—and where buyers might be able to negotiate a better deal.

“With buyers pulling back, homes linger for a longer time on the market and more homeowners have to slash prices to get a deal done,” says Realtor.com Senior Economist George Ratiu.

The parts of the country seeing the steepest price cuts tend to be those that attracted lots of interest from out-of-state buyers and prices surged the most, far out of reach of many local would-be buyers.

Eight of the top 10 metropolitan areas with the most price reductions—except for Sacramento, CA (No. 7), and Colorado Springs, CO (No. 8)—experienced higher appreciation during the COVID-19 pandemic through today (March 2020–June 2022) than the national 26.2% rise over the same period.

“Price cuts are hitting hardest in markets which have been on a hot streak during the pandemic—cities which saw an influx of buyers looking for quality of life, more space, and affordability,” says Ratiu. “These are also markets which experienced a fast ramp-up in prices due to the inadequate supply of housing.”

To find the places with the most price reductions, the Realtor.com data team analyzed the 200 largest metropolitan areas and calculated which ones in June saw the highest percentage of home listings with price cuts on Realtor.com. To achieve geographic diversity, we included only one metro per state. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)

More metros are expected to make their way onto this list as the year goes on,

“As the number of homes for sale grows, we can expect price reductions to become the norm, especially in high-cost areas,” says Ratiu. “For buyers, the change points to more opportunities in the months ahead, especially the fall and winter.”

Now, let’s take a look at some places where buyers just might be able to find a bargain. Maybe.

Source: realtor.com

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To put it simply, a seller’s market happens when there are more homebuyers than sellers. Based on the basic law of supply and demand, this means that sellers have the upper hand and can sell their homes quicker, at higher prices, with little pushback from buyers.

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And the pandemic didn’t help, bringing in a wave of new buyers in the early days snapping up available inventory, and later supply chain issues and labor shortages made it even more difficult for builders to meet the demand for new homes. As a result, home sellers have seen unprecedented benefits and profits—they have been the group in the driver’s seat.

So Cal Re Market Report/ Buyer, Seller & Investor Tips

Buyers, Sellers & Investors: Seek the advice of an experienced local realtor for data specific to your market. Work with realtors with skills and character you can trust, find them on our Real Estate Expert Panel on our home page.

What’s Causing Ongoing Home Price Appreciation?

Even though inventory is increasing this year as the market moderates, supply is still low. The graph below helps tell the story of why there still aren’t enough homes on the market today. It uses data from the Census to show the number of single-family homes that were built in this country going all the way back to the 1970s.

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