Now that major cities have opened back up and workers are returning to their offices, real estate markets across the United States that boomed during the pandemic are finding that demand is now dwindling.
Mile High Prices Dropping
According to data released by Redfin, 21% of home sellers dropped their asking prices in July — the highest share since Redfin began tracking those numbers in 2012. Nowhere has the hangover been felt more severely than in pandemic home-buying boomtowns like Denver, Boise, and Salt Lake City, where newly-remote workers flocked for easy access to the always-open outdoors. In Boise, almost 70% of homes listed for sale slashed their listing prices in July. In Denver, 58% of homes had price drops, and in Salt Lake City, almost 55% of listed home prices dropped.
Overvaluations and Unrealistic Expectations
Realtors say these price drops are likely because homeowners saw how much neighboring homes had sold for earlier in the pandemic and set their own list prices too high.
But the U.S. housing market has cooled quite a bit since the pandemic rush, when sellers expected to receive multiple over-asking-price offers within days of a property being listed. Now, as the Federal Reserve has raised interest rates to combat inflation and mortgage rates are now over 5%—twice as high as rates were in January of this year—the demand for homes has begun to cool.
Cities in the Mountain West aren't the only ones to see home prices plummet. Tacoma, Tampa, Sacramento, Indianapolis, and Phoenix have all seen more than 50% of listed properties drop their prices. Across the U.S., Redfin's data shows that sales fell by 19.3% in July compared to July 2021, with sales declining for six straight months to now be at the lowest level they've been since the start of the pandemic.
What Will Happen Next?
Still, experts say that home prices are nowhere near as low as they might eventually go. But, with borrowing costs higher than they've been in years, that's not necessarily good news for buyers—unless they can pay with cash.
With some much volatility in the real estate industry, you need a trusted expert to turn to with your questions. Attorney Melvin Monachan is an experienced real estate attorney in New York who specializes in foreclosure defense and real estate closings. Call (347) 389-1682, or contact us online to get advice.