Sellers are cutting the prices on Homes because homebuyer demand has collapse. New data from the National Association of Realtors shows a huge 20% YoY Decline in Pending Home Sales. The lowest reported figure since 2011.
One reason why homebuyer demand has collapsed is because the Federal Reserve and Jerome Powell keep hiking interest rates. Today they increased the Benchmark Rate by 0.75%. And will likely hike more into the future. This means Mortgage Rates will likely remain elevated throughout the rest of 2022.
One market where price cuts are surging out of control is Las Vegas. Where over 44% of listings have a price cut according to Redfin. Another market is Austin, TX where 48% of listings have a price drop. Boise, ID leads them all with a price cut rate nearing 70%.
The reality is that Housing Markets which boomed during the pandemic are going to have price declines going forward. Meanwhile, more stable metros in the Midwest such as Pittsburgh, Cleveland, and Buffalo will likely hold their value better.
This trend is exactly what occurred in the 2008 Housing Crash. Where it was the hottest Housing Markets across Florida, Arizona, and California that had the biggest Crash (40-60% Price Drops in many cases)
Price Cut Data Provided by Redfin: https://www.redfin.com/news/data-center/
Historical Home Price data by Zillow: https://www.zillow.com/research/data/
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