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Home Sellers in Migration Hotspots Increasingly Turn to Price Drops
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Redfin reports a significant increase in home price drops, especially in migration hotspots, as rising mortgage rates affect buyer affordability. In April, 41% of home sellers in Boise, ID reduced prices, a sharp increase from 10% last year. Other cities with notable drops include Cape Coral, FL (33%) and New Orleans (32%). The national rate of price drops is at its highest since October 2019. Daryl Fairweather, Redfin's Chief Economist, attributes the trend to diminished buyer demand due to higher mortgage rates, impacting previously inflated prices.
Positive
Price drops in major markets signal potential buying opportunities for investors.
Redfin's extensive analysis across 108 metropolitan areas provides valuable market insights.
Negative
41% of home sellers in Boise reduced prices, indicating a significant decline in buyer interest.
Increased mortgage rates are negatively impacting housing demand, leading to higher price drops.
The sudden surge in mortgage rates has reduced homebuyers’ budgets in many markets, forcing sellers to reset their price expectations
SEATTLE--(BUSINESS WIRE)--
(NASDAQ: RDFN) — Price drops are becoming increasingly common, particularly in hot migration destinations, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. In Boise, ID, where home prices are up 62% in the past two years, 41% of home-sellers dropped their price in April, the largest share among the 108 metropolitan divisions included in Redfin’s analysis. That’s up from 10% a year ago. Cape Coral, FL (33%), New Orleans (32%), Baton Rouge, LA (31%) and Sacramento (30%) rounded out the five markets that are driving the national rate of price drops to its highest level since October 2019.
“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,” said Redfin Chief Economist Daryl Fairweather. “When mortgage rates were at or below 3%, both local and out-of-town homebuyers were more willing and able to tolerate high prices, but at 5%, many are now 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.”
More than 20% of home sellers dropped their price in April in seven of the 10 most popular April migration destinations (Cape Coral, FL; Sacramento; North Port, FL; Tampa, FL; Atlanta, GA; San Antonio, TX and Phoenix). For home sellers in these markets, the sharp increase in mortgage rates has knocked some of the wind out of a housing market that had been super-charged by surging migration.
“Conversations with prospective sellers are longer and more emotional now than they were just a few months ago,” said Boise Redfin real estate agent Shauna Pendleton. “If your home has been listed for several days with little or no interest from buyers, it’s time to consider dropping the price. If you do have to drop the price, you are far better off doing one large price drop instead of a series of smaller price drops. A larger number of drops is often interpreted as desperation and encourages buyers to wait even longer or make a lower offer.”
In six metro areas, the share of homes with a price drop decreased significantly (5 percentage points or more) from a year ago. All six had a median sale price in April below the national median of $424,400. The share of homes with price drops fell 18 points in Fresno, CA, 12 points in McAllen, TX, 10 points in Bakersfield, CA and 9 points in Elgin, IL, Lake County, IL and Chicago.
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.
What does Redfin's latest report say about price drops in the housing market?
Redfin's report reveals a steep increase in home price drops, particularly in areas like Boise, ID, where 41% of sellers lowered their prices in April, compared to 10% a year prior.
How have mortgage rates impacted the housing market according to Redfin?
The surge in mortgage rates has reduced homebuyers' budgets, leading to decreased demand and more frequent price drops in many metropolitan areas.
Which cities are experiencing the highest rates of price drops according to Redfin?
Cities with significant price drops include Boise, ID (41%), Cape Coral, FL (33%), and New Orleans (32%), among others.
What is the national trend in home price drops as per Redfin's report?
The national rate of price drops has reached its highest level since October 2019, driven by increased mortgage rates affecting buyer affordability.
What advice does Redfin offer to home sellers amidst rising price drops?
Redfin advises sellers to consider a significant price reduction if their home has been on the market without interest, rather than a series of smaller drops.
