Published by Forbes.com | August 28, 2022
In an analysis of the 97 most populous U.S. metro areas, one quarter of home sellers lowered home asking prices in June.
Given rising mortgage rates that spiked to their highest levels since the 2008 housing crisis and fears of a recession, the real estate market has been preparing for a slowdown. Many experts are cautioning sellers to say goodbye to the pandemic housing boom and welcome an era of fewer bidding wars and higher inventory. That said, national home prices are expected to increase 4.3% between June 2022 and June 2023, according to CoreLogic. Still, some areas across the country remain particularly vulnerable to falling home prices.
Many sellers have slashed their asking prices in recent months. Some cities—particularly those that were popular early on in the pandemic—are seeing this trend more widely than other areas, according to a recent report by national real estate brokerage Redfin. In an analysis of the 97 most populous U.S. metro areas, one quarter of home sellers lowered home asking prices in June.
Some of the hidden gem cities that experienced an influx of new residents during the pandemic are now cooling the fastest. Boise, Idaho, for example, touted as the most overvalued housing market in America where prices spiked as much as 80% last year, is seeing a decline. Recently, two-thirds of sellers (61.5%) in Boise have cut their asking prices, said Redfin.
“Higher mortgage rates and a potential recession are causing prospective buyers in popular migration destinations to press the pause button, and they’re also having a big impact on workers in big job centers who rely on their stock portfolio for down payments. Sellers are adjusting their expectations in real time as they realize they may not get the price their neighbor got two months ago.”
–Sheharyar Bokhari, senior economist at Redfin
Denver is also seeing a dip, with 55.1% of sellers lowering home asking prices. Some 51.6% of sellers in Salt Lake City and 49.5% of sellers in Tacoma, Wash. recently cut prices. Other metro areas that are following this trend include Grand Rapids, Mich. (49.3%), Sacramento (48.7%), Seattle (46.3%), Portland, Ore. (45.7%), Tampa, Fla. (44.5%) and Indianapolis (44.1%).
“My advice to prospective sellers is to list their home slightly lower than they think they should and be patient,” Denver Redfin agent Andy Potarf said in the report.
In a separate survey, Redfin looked at cities where residents have high debt compared to income and where home equity remains vulnerable as a result of this. In these areas, homeowners are more likely to foreclose or sell at a loss.
