Price cuts have become increasingly common in the United States, especially in parts of Utah and other mid-size metros in the West, according to a new report from Redfin.
Many of the subways with the biggest share of price cuts in May saw outsized price growth during the pandemic because they were seen as hotspots for people traveling from other parts of the country.
“There are two types of sellers in today’s market: those who already know the market has cooled and those who find out about the cooling market during the selling process,” said Redfin chief economist Daryl Fairweather. “The former want to sell quickly before the market slows further and are ready to immediately price slightly below comparable homes in their neighborhood, and the latter may have to lower their price if their home doesn’t attract sales.” buyers in a few weeks.. As more sellers come to terms with the market downturn, fewer homes will see price drops.
Provo, Boise, Salt Lake City, Sacramento and Ogden were the top five cities with the largest increase in share of listings with price declines from a year earlier. About 12% of listings in Provo and Boise saw a price drop in May 2021, or about 20% overall in Salt Lake City, Sacramento and Ogden.
About half of the metros in this analysis saw more than 25% of home sellers lower their asking price in May. More than 10% of home sellers lowered their prices in the 108 metros, bringing the national share of price cuts to a record high.
The resurgence of price cuts is symbolic of the slowdown in the real estate market. Many buyers are recoiling in the face of soaring home prices, soaring mortgage rates, high inflation and a shaky stock market.
Four of the 10 metros with the highest share of price cuts — Provo, Salt Lake City, Boise and Ogden — are among the 10 places where prices have risen the most during the pandemic. Prices climbed 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 price spike was largely due to the influx of out-of-town home buyers during the pandemic, competing with locals for a limited number of homes. Migration to Boise and the Salt Lake City metro area nearly tripled throughout 2020.
The trend began to reverse in both locations, 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 pulling out of the market — and even deals — and some sellers are responding by lowering their price,” Boise Redfin agent Shauna Pendleton said. “Some buyers can no longer afford the home they want because mortgage rates have gone up so much. There aren’t as many people moving to the Boise area now that prices have skyrocketed. Ironically, many of Boise’s newcomers are leaving now because the quiet, slow-paced lifestyle that attracted them here no longer exists as it did before so many moved in. These people are taking advantage of their equity to move into more affordable housing. regions, mostly in the Midwest, where they can get more for their money — in some cases, they can even pay cash for everything.
The share of homes with a price drop increased year-on-year in 102 of the 108 metros in this analysis.
To read the full report, including a table of price drop data for the 100 most populous US metropolitan areas, Click here.