The residential real estate market in the U.S. has been on an unprecedented run. Partially due to the migration of people from the largest coastal cities during the COVID-19 pandemic, home prices in mid-sized and smaller cities are, in the majority of cases, up by double digits. The carefully followed S&P Case-Shiller home price index for May showed nationwide home process rose 16.6% year over year, the biggest jump in the history of the index. In Phoenix, the figure was over 20% for the same period.
There are other factors driving the jump in home prices. Among them are historically low mortgage rates, which make homes many people could only dream of owning more affordable. And, as people continue to work from home, where they live can be based on lifestyle preferences and not where their employers are located.
In a small minority of cities, prices of homes are being cut. Realtor.com has just released a piece of research entitled “Boon for Buyers: 10 Cities Where Sellers Are Slashing Home Prices.” Commenting on the details of the study, Realtor.com Senior Economist George Ratiu said:
“In our July data, about 45 cities from the top 300 largest showed an increase in the number of homes with price cuts or buyers, these trends hold the promise of a less frenzied market, with more choice and better prices.”
There are several reasons these markets may be running against the tide. One is lack of demand. Another is that in some markets, it may be traditional to price homes well above what they are likely to sell for.
The city with the largest percentage of homes for sale have had their prices cut is Des Moines, at 32%. The median asking price for a listed home is $193,050, which is about two-thirds of the national figure. In other words, Des Moines can be considered an “affordable” market. One reason Realtor.com researchers think there have been cuts is additional inventory that has become available recently. Another is that high home prices may have caused people to simply drop out of the market. Since home prices trends by market continue to shift rapidly, the situation in Des Moines could change again.
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