Sellers are slashing prices largely in the areas that had been hottest for the past two years, according to a new report from Realtor.com.
Realtor.com’s new report utilizes their listing data, which comes from multiple listing services around the country, to see where the October year-over-year portion of homes for sale with a price reduction has increased the most.
The report found that the markets that had become magnets for those fleeing the coastal population hubs, mostly in up-and-coming metros in the West and the South, are now seeing record levels of listing price cuts.
Key highlights:
- Seven of the top 10 states seeing the biggest increase in home price reductions are in a contiguous chunk of the western United States. The remaining three are Southern Sun Belt states that similarly drew lots of newcomers.
- Arizona has the highest price cutting rates. The current median listing price is $465,000 and the portion of listings with a price reduction in October 2022 is 40%. The difference from last year is +30%.
- Arizona has gone from 1 in 1o listings with a price reduction a year ago to now more than 1 in 3. The fall in values and demand was so great that entire neighborhoods in the suburbs on the edge of the Phoenix metro area were filled with brand-new homes that remained empty after buyer demand evaporated.
- Las Vegas comes in second with a $469,000 listing price and a 37% portion of reduced listings. This is a +23% difference from last year.
- Only 1 in every 7 listings was marked down from their initial price last year in Nevada, and now it’s more than 1 in 3. In just the past month, the portion of homes listed with a price reduction has jumped by 2.6%, and prices are down by around 7% since the summer.
- Third is Utah with a $560,000 listing price and a 32% portion of reduced listings. This is a difference of +22% from last year.
- Following this is Colorado in fourth with a listing price of $585,000 and a 29% portion of reduced listings. The difference from last year is +18%.
- In Colorado Springs, where the figure is even higher, at 39% of listings with a price reduction, this medium-sized, three-bedroom home is now listed with a 7% price reduction, which is just a little below the metro’s 9% decline in median listing price since June.
- Lastly, Idaho ranks fifth with a listing price of $539,000 and a 37% portion of reduced listings. The difference from last year is +17%. Prices in Boise, which had grown by 70% from late 2019 to early 2022, are down 13% since May.
Major takeaway:
“The unifying thread among these states is they have all seen a significant influx of buyers of the last 2.5 years,” said George Ratiu, senior economist and manager of economic research for Realtor.com. “These new buyers drove up local market prices. In some cases, even beyond local residents’ ability to compete.”
The report states that the other similarity in the places seeing the most price cuts is the prevalence of seasonal buyers—whether retirees shopping for a winter condo in the suburbs of Phoenix, or Seattleites looking for a second home in Boise. During the COVID-19 pandemic, many buyers rushed to purchase vacation homes. Now that mortgage rates are higher, the stock market is suffering, and inflation is high, many buyers are holding off on nonessential real estate purchases.
“When borrowing money is expensive, they tend to be the first to pull back,” said Ratiu.
For the full report, click here.
