Daniel Acker | Bloomberg | beautiful pictures
An increasing number of home sellers are slashing their asking prices as rising mortgage rates and inflation have dampened competition in the housing market.
Some cities are offering more discounts than others. Boise, Idaho, led the way in June, with 61.5% of sellers reducing their asking price, according to a new report from Redfin, a real estate brokerage.
Boise is one of the hotter markets in terms of the pandemic, as a work-from-anywhere culture has driven thousands of people to flee more expensive markets like San Francisco and Los Angeles. A year ago, only about a quarter of sellers in Boise had dropped their prices.
The top 10 markets seeing a drop in asking prices:
- Boise, Idaho: 61.5%
- Denver, Colorado: 55.1%
- Salt Lake City, Utah: 51.6%
- Tacoma, Washington: 49.5%
- Grand Rapids, Michigan: 49.3%
- Sacramento, California: 48.7%
- Seattle, Washington: 46.3%
- Portland, Oregon: 45.7%
- Tampa, Florida: 44.5%
- Indianapolis, Indiana: 44.1%
Many of these markets have seen massive price increases during the pandemic that are simply unsustainable as interest rates rise. The average interest rate on a 30-year fixed mortgage is now nearly double what it was at the start of the year. That makes the cost of ownership significantly higher.
Boise sees home prices up more than 60% from pre-coronavirus levels. Nationally, home prices are up about 39% since March 2020, when Covid-19 was declared a pandemic, according to the S&P Case-Shiller Index.
Read more real estate news
“Higher mortgage rates and a potential recession are causing potential buyers in popular migration destinations to hit the pause button, and they are also having a big impact on workers in the hubs,” said Sheharyar. large job centers who rely on their stock portfolios to pay off.” Bokhari, senior economist at Redfin.
The competition is also cooling down because the supply in the market is increasing. Inventories hit record lows during the pandemic, but now, as homes sit longer and demand rebound, it’s finally picking up. According to Realtor.com, operating inventory grew 28% last week compared to the same period a year ago.
The property market is still under-supplied compared to 2019, but they are moving in the right direction. However, housing is still far less affordable than it was before the pandemic. According to Realtor.com, for a $75,000 household, only 23% of homes on the market today are affordable, down from 50% of inventory in 2018.
George Ratiu, senior economist at Realtor.com, said: “While these trends are leading to a cooler-than-normal summer home buying season, the way forward is towards a turnaround. promising, away from severe supply and demand shortages, and compete at all costs,” said George Ratiu, senior economist at Realtor.com.