Soaring mortgage rates and home prices have hammered prospective homebuyers this year. But now there’s some good news.
The share of homes for sale with price drops hit 21% in July, according to real estate brokerage Redfin, the highest percentage since it began tracking the data in 2012.
“Sellers had to cut their prices because, they were catching up with buyers, who had come to expect lower prices amid a cooling market,” Redfin said in commentary accompanying its data.
“Rising mortgage rates and the prospect of falling home values also made buyers hesitant to pay sky-high prices, and an uptick in supply gave them more to choose from.”
To be sure, “price drops are likely to flatten, as sellers come to terms with the shifting market,” the report said.
But for July, prices particularly slid in pandemic boomtowns. Almost 70% of homes for sale in Boise, Idaho saw a price decrease, the highest share of the 97 metropolitan areas that Redfin surveyed.
Denver was second with 58% experiencing a descent in July, followed by Salt Lake City with 56.4%; Tacoma, Wash. with 54.8%; Tampa with 52.1%; Sacramento with 52% and Indianapolis with 51.4%.
Advice to Sellers
In light of these numbers, Redfin agent Shauna Pendleton offers some advice to sellers. “Price [your] home correctly from the start, accept that the market has slowed and understand that it may take longer than 30 days to sell,” she said.
“If someone is selling a nice home in a desirable neighborhood, they shouldn’t need to drop their price.”
In other good news for the housing market, the Zillow Home Value Index dipped 0.1% in July from June, the first decline since 2012, with home prices falling in 30 of the 50 largest metro areas.
The typical home value now stands at $357,107, down from $357,473 in June. The decline came as part of a gradual trend, with home-value growth slowing in May and June.
San Jose, San Francisco Lead Declines
The largest July home-value declines came in in San Jose (4.5%) and San Francisco (2.8%), the nation’s most expensive major markets. Then came Phoenix (2.8%) and Austin (2.7%), which rose the most during the pandemic. Apparently what goes up must come down.
But don’t get too excited, Zillow says. “While the recent decline in prices is a notable development, the housing market is still far from a return to normal conditions,” it said in a report with the data.
If you add higher prices with rising mortgage rates, the typical mortgage payment has risen by more than 60% in just the last year, Zillow said.
