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May 31, 2022
Some homeowners may need to reset their price expectations. Signs of a slowing real estate market are growing across the country—existing-home sales and new-home sales are falling as well as pending home sales. Pending home sales fell for the sixth consecutive month in April and are now at the slowest pace in nearly 10 years, the National Association of REALTORS® reported last week.
Homes are still selling fast but a slowdown is evident in many markets. Amid rising mortgage rates that are pricing more buyers out, some home sellers are having to revisit their asking price.
Price drops are particularly more common in migration hotspots, places that have been relatively affordable but saw home values surge as more people have migrated in from coastal areas since the pandemic began. For example, in Boise, Idaho, home prices are up 62% over the past two years. In April, 41% of home sellers dropped their prices, the largest of 108 metro areas.
More than 20% of home sellers dropped their price in April in seven of the 10 most popular migration destinations, the report says. Other areas that are seeing a rise in price drops include Cape Coral, Fla. (at 33% in April); New Orleans (32%); Baton Rouge, La (31%); and Sacramento, Calif. (30%).
“Many places like Boise or Sacramento that saw a surge in migration and a sharp increase in home prices over the past two years have now seen an abrupt drop-off in demand, leading sellers to drop their prices with increasing frequency,” says economist Daryl Fairweather. “When mortgage rates were at or below 3%, both local and out-of-town home buyers were more willing and able to tolerate high prices, but at 5%, many are priced out. A home’s price is driven by the balance of supply and demand, and when demand drops off and supply increases like it is now, rapid price increases evaporate quickly.”
Lawrence Yun, NAR’s chief economist, said in a recent release on the latest housing data that higher mortgage rates have increased the cost of purchasing a home by more than 25% compared to last year. In many cases, that could mean the higher mortgage payments are leading up to $500 more per month for borrowers. Further, higher home prices add another 15% to that figure, Yun says. Also, households are facing rapid inflation that is increasing everyday costs, like fuel and food.
About the Author
Ryan Christensen
Responsive, Responsible and Resourceful - How Real Estate Should Be. This is the foundation of our continued success: responsive service, providing accurate and timely information, and demystifying the process. 100% of my business is referral based because I listen to my clients' needs and exceed their expectations. As a full-time real estate broker, I am the best advocate for both my buyers and sellers. I am always available, regardless of the time of day.
Being a native Southern Californian is a tremendous advantage. I know the area. Time is more valuable than money, but neither can be wasted. And, I'm a fan of hard work. My clients can enjoy their home buying and/or selling experience because I provide a trusting, focused, straightforward approach. I look forward to helping you achieve your goals and find joy in homeownership.
I am both a licensed Real Estate and Mortgage Broker. Others choose to concentrate on one or the other. I provide a higher level of service and expertise than those who do not obtain this dual skill set, which differentiates me from other service providers. My decisions and advice are based solely on what is in the best interest of my clients. I use Real Estate Sales as a tool to make sure my clients get the home that meets or exceeds their needs. As a Mortgage Broker, I search for the best loans so I can offer lower rates and pricing than my financing competition. This certainly IS in the client's best interest.