More Than 40% of Home Sellers Are Dropping Their Prices in Salt Lake City, Boise, Sacramento and Other Pandemic Hot Spots
June 21 2022 - 8:30AM
Business Wire
Sellers are adjusting their expectations as
they realize many buyers are no longer able to afford the type of
home they could have before mortgage rates shot up
(NASDAQ: RDFN) — Price drops have become increasingly common
throughout the U.S., particularly in parts of Utah and other
mid-sized metros in the West, according to a new report from Redfin
(redfin.com), the technology-powered real estate brokerage. Many of
the metros with the biggest share of price drops in May had
outsized price growth during the pandemic because they were
hotspots for people moving in from other parts of the country.
“There are two kinds of sellers in today’s market: Those who
already know the market has cooled, and those who are learning
about the cooling market as they go through the selling process,”
said Redfin Chief Economist Daryl Fairweather. “The former wants to
sell quickly before the market slows further and they’re willing to
price slightly below comparable homes in their neighborhood right
away, and the latter may have to drop their price if their home
doesn’t attract buyers within a few weeks. As more sellers come to
terms with the slowing market, fewer homes will have price
drops.”
Nearly half (47.8%) of homes for sale in Provo, UT—located about
45 miles away from Salt Lake City—had a price drop in May, the
highest share of the 108 metropolitan divisions in this analysis.
Tacoma, WA, had about the same share of price cuts, at 47.7%. Next
come Denver (46.9%), Salt Lake City (45.8%) and Sacramento (44.3%).
Boise, ID (44.2%), Ogden, UT (42.6%), Portland, OR (42%),
Indianapolis, IN (41.9%) and Philadelphia (41.2%) round out the top
10.
Provo, Boise, Salt Lake City, Sacramento and Ogden were also the
top five metros with the biggest increase in the share of listings
with price drops from a year earlier. Roughly 12% of listings in
Provo and Boise had a price drop in May 2021, and it was around 20%
in Salt Lake City, Sacramento and Ogden.
All in all, about half of the metros in this analysis saw more
than 25% of home sellers drop their asking price in May. More than
10% of home sellers dropped their price in all 108 metros, driving
the national share of price drops to a record high.
The uptick in price drops is symbolic of the slowdown in the
housing market. Many buyers are backing off amid skyrocketing home
prices, surging mortgage rates, high inflation and a faltering
stock market.
Sellers are adjusting expectations in Salt Lake City,
Boise
Four of the 10 metros with the highest share of price
drops—Provo, Salt Lake City, Boise and Ogden—are among the 10
places where prices increased most during the pandemic. Prices shot
up 65.7% to $550,000 from May 2020 to May 2022 in Provo. They rose
56.2% to $556,000 in Salt Lake City, 66.7% in Boise to $550,000 and
57.2% to $500,000 in Ogden.
The soaring prices were largely due to out-of-town homebuyers
moving in during the pandemic, competing with locals for a limited
supply of homes. Migration into both Boise and the Salt Lake City
metro area—which includes Provo and Ogden—nearly tripled throughout
2020. The trend has started to reverse in both places, with Salt
Lake City seeing a net outflow (more Redfin.com users looking to
leave than move in) for the first time on record in the first
quarter.
“Many buyers are backing out of the market—and even backing out
of deals—and some sellers are responding by dropping their price,”
said Boise Redfin agent Shauna Pendleton. “Some buyers are no
longer able to afford the home they want because mortgage rates
have increased so much. There aren’t nearly as many people moving
into the Boise area now that prices have gone through the roof.
Ironically, a lot of Boise newcomers are now leaving because the
quiet, slow-paced lifestyle that drew them here doesn’t exist the
way it did before so many people moved in. Those people are cashing
in on their equity to move to more affordable areas, mainly in the
Midwest, where they can get more for their money—in some cases,
they can even pay all cash.”
The share of homes with a price drop increased from a year
earlier in 102 of the 108 metros in this analysis. It declined in
six metros, three of them in Illinois: McAllen, TX, Elgin, IL,
Chicago, Fresno, CA, Lake County, IL and Springfield, MA.
To read the full report, including a table of price-drop data
for the 100 most populous U.S. metro areas, please visit:
https://www.redfin.com/news/price-drops-increase-may-2022.
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
instant home-buying (iBuying), rentals, lending, title insurance,
and renovations services. We sell homes for more money and charge
half the fee. We also run the country's #1 real-estate brokerage
site. Our home-buying customers see homes first with on-demand
tours, and our lending and title services help them close quickly.
Customers selling a home can take an instant cash offer from Redfin
or have our renovations crew fix up their home to sell for top
dollar. Our rentals business empowers millions nationwide to find
apartments and houses for rent. Since launching in 2006, we've
saved customers more than $1 billion in commissions. We serve more
than 100 markets across the U.S. and Canada and employ over 6,000
people.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20220621005188/en/
Redfin Journalist Services: Ally Braun, 206-588-6863
press@redfin.com
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