With the housing market shifting in a new direction, home sellers have begun cutting back their listing prices, especially at the more high end of the market, leaving open the possibility that it is now starting to shift into a buyer’s market. Around 14.2% of homes listed for sale on Zillow saw a price cut in June, up from a recent low of 11.7% at the end of 2016, according to new data released. Homebuyers should be absolutely ecstatic.
Sellers are being forced to negotiate because of the low affordability in today’s market; few buyers are willing to pay the full asking price. A new report from CNBC sums it up claiming, “After several years of rich home price gains, the market appears to have found a limit to what people can afford. Sellers are finally responding by lowering prices more often.” This momentum is exactly what is needed for a change that could result in quite a bit of relief for buyers who have been in the hot seat of fierce competition to land a reasonable deal. On this, Aaron Terrazas, Zillow senior economist, comments, “The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly.” Experts point to multiple determining factors including rising unaffordability and rising interest rates.
CNBC looks back for insight reporting, “The simple reason was supply and demand. As millennials aged into their home-buying years, homebuilders did not and are still not meeting the rising demand. Also, millions of single-family homes lost to foreclosure were purchased by investors and turned into single-family rentals, further depleting the for-sale housing stock. The market was thus suffering a critical shortage, just as demand was taking off. Prices had nowhere to go but up. Until now.” Sellers are being forced to suck it up and cut their prices due to the lack of breathing room in the market. This shift can be frustrating for sellers, but the housing market is spiraling out of their control.
Given some seemingly good news for buyers, the fact remains that market high ends are seeing the most effective concerning price cuts while, in some areas, the lower end markets are less affected. On this note, Terrazas specifies, “A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsize price gains in recent years.”
Further to this point, when analyzing the data, HousingWire.com clarifies, “But this increase is coming from the top end of the market, rather than starter homes, where real relief is needed. The data shows that for homes priced in the top one-third of all homes listed for sale, those with a price cut increased 0.9% to 16.2% annually in June.” Without a doubt, some markets are shifting more drastically than others, but the changes are showing almost everywhere. For example, “In San Diego, 20 percent of all listings had a price cut in June, up from 12 percent a year ago,” leaving some realtors to notice a exchange of power to the buyer, according to CNBC. Slowly but surely, with a return to normal trends, all signs point to some relief ahead for future homebuyers.