Home sellers in pandemic boomtowns are slashing prices as they adapt their expectations to a rapidly cooling market.
Take Boise, Idaho, where 70% of houses for sale dropped their asking price in July, more than double the 30% that cut prices a year earlier. It’s also the highest share of price drops out of 97 US metro areas analyzed by online brokerage Redfin.
“Individual home sellers and builders were both quick to drop their prices early this summer, mostly because they had unrealistic expectations of both price and timelines,” said Boise Redfin agent Shauna Pendleton. “They priced too high because their neighbor’s home sold for an exorbitant price a few months ago, and expected to receive multiple offers the first weekend because they heard stories about that happening.”
People who could suddenly work from anywhere during the pandemic flooded once-quiet housing markets like Boise, Phoenix and Tampa, Florida, in search of more space and lower housing costs. This demand sent home values soaring.
Now, the Federal’s Reserve’s efforts to tamp down inflation have sent mortgage rates above 5% and pulled the brakes on the housing market. Nationwide, home sales dropped 19% year-over-year in July to the lowest level since the early days of the pandemic, and the share of homes for sale with price drops reached 21% in July, the highest share in Redfin data going back to 2012.
Denver, which attracted hordes of remote-friendly Silicon Valley tech workers during the pandemic, saw 58% of homes for sale slash prices in July compared with 36% the year prior. In Salt Lake City, 56% of listings cut their asking prices followed by Tacoma, Washington, at 55% and Tampa at 52%.
The share of homes with a price drop increased in all but three of the 97 metro areas surveyed by Redfin, and all of those were in Illinois: Lake County, Elgin and Chicago.
This article was provided by Bloomberg News.