Home prices fall in ‘epidemic boom cities’ as market declines
Homeowners in markets that boomed when the real estate sector was too hot during the COVID-19 pandemic have been forced to cut prices due to dwindling demand, according to data released Monday from Redfin.
Across the US, 21% of home sellers cut their asking prices in July — the highest percentage since Redfin began tracking the scale in 2012, according to the company. Home shares rose with lower prices in July than a year ago in 94 of the 97 metro areas surveyed.
The trend was at its worst in “pandemic home-buying boom cities” like Boise, Idaho, where 69.7% of homes for sale slashed listing prices in July. Other frenetic markets included Denver, with prices down 58%, and Salt Lake City, with a 54.8% share of discounts.
“Both home sellers and individual builders rushed to lower their prices early this summer, mostly because they had unrealistic expectations for both price and schedules,” said Shauna Pendleton, a Redfin agent based in Boise.
“Their prices are very high because their neighbors’ house sold out for a bit a few months ago, and they are expected to receive multiple offers in the first weekend because they have heard stories of this happening,” Pendleton added.
The US housing market has experienced a severe cold in recent months as the Federal Reserve has tightened monetary policy to tackle rampant inflation. Mortgage rates rose above 5%, nearly double what they were in January.
The sharp rise in mortgage rates has exacerbated the affordability crisis for potential buyers who are dealing with the effects of inflation on their budgets as well as rising home prices. This trend has exhausted demand and left sellers with no choice but to lower their expectations.
Other metro areas with a share of home price reductions of over 50% included Tacoma and Washington. Tampa, Florida; Sacramento, California; Indianapolis, and Phoenix, according to Redvin.
Redfin data showed home sales overall fell 19.3% in July from a year earlier. Activity is at its lowest level since the start of the COVID-19 pandemic. Sales have declined for six consecutive months.
“Some potential homebuyers were sidelined because their prices were off-market; the company said in a statement:
As The Post reports, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients last week that the market pullback is “still close to the bottom, especially relative to prices.”
“The bottom is still a bit off, given the degree to which demand has been crushed by rising prices; the monthly mortgage payments required for a new single-family home buyer are no longer going up, but they are still up 51% on a basis,” Shepherdson said in a note to clients. annually in July.
Credit rating agency Fitch also warned of an impending downturn, predicting that prices could eventually fall by as much as 15% in the event of a major recession in the housing sector.