Home prices are falling in ‘epidemic cities’ due to market downturns

Homeowners in markets where the real estate sector was red hot during the COVID-19 pandemic are now being forced to cut prices due to declining demand, according to data released by Redfin on Monday.

Across the U.S., 21% of home sellers lowered their prices in July — the highest share since Redfin began tracking the metric in 2012. According to the company. In 94 of the 97 metro areas surveyed, the stock of homes with declining prices increased in July from a year ago.

The trend was worst in “epidemic homebuying boomtowns” like Boise, Idaho, where 69.7% of homes for sale saw list prices drop in July. The hottest markets included Denver with a 58% price drop and Salt Lake City with a 54.8% cut.

“Both individual home sellers and builders quickly lowered their prices earlier this summer, mostly because they had unrealistic expectations of both price and timelines,” said Boise-based Redfin agent Shauna Pendleton.

“They’ve been very expensive since their neighbors sold for more a few months ago and are expected to get multiple offers in the first weekend because they’ve heard stories about what’s going on,” Pendleton added.

Salt Lake City is one of the hottest markets.
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The U.S. housing market has cooled significantly in recent months as the Federal Reserve tightens inflationary policy. Mortgage rates rose above 5%, more than double what they were in January.

Rising mortgage rates have added guide to West Chester PA real estate to an affordability crisis for prospective buyers struggling with the effects of inflation on their budgets and skyrocketing home prices. This trend has dampened demand and given sellers little choice to lower their expectations.

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Tacoma, Wash. Tampa, Fla.; Sacramento, California; Indianapolis and Phoenix, according to Redfin.

Overall, home sales fell 19.3% in July from a year earlier, data from Redfin showed. Activity has hit its lowest level since the start of the COVID-19 pandemic. Sales have fallen for six consecutive months.

The house is for sale
The housing market is in the midst of a downturn.
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“Some prospective homebuyers were sidelined by being priced out of the market; others were wary of possible future home value declines,” the company said in a release.

As reported by The PostIan Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients last week that the market’s decline “is nowhere near the bottom yet, especially for prices.”

“Given the extent to which demand has been crushed by rising rates, the bottom is still some way off; the monthly mortgage payment required for a new buyer of an existing family home is no longer rising, but it was up 51% year-on-year in July,” Shepherdson said in a note to clients.

Credit rating agency Fitch It predicts that prices could eventually fall by as much as 15% if a major housing downturn occurs.

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