Half of Provo Home Vendors Just Reduced Their Demand — These 19 Home Purchases Are Not Far Back

Even in a hot home market, it is common for some sellers to lower their list price. A salesperson may decide that he or she wants to test the limits of the market just to find out that they were more or less greedy. Sometimes it’s even by design: This discounted price, of course, makes buyers feel like they have a deal.

But if a regional housing market sees a huge rise in price reductions, it usually means things are starting to calm down. This is exactly what we are seeing now.

Of the 108 regional home purchases measured by Redfin, 102 saw price increases in May compared to the same month last year. In May 2021, the standard market saw 15.7% of its listings fall in prices. The typical market in May 2022 saw 25.7% of its listings decrease in prices.

This fast cools – which Luck has been compiled the Great Slowing– is almost even. Of Redfin’s 108 regional home purchases, 29 saw more than 30 percent of its home purchases fall in price in May.

The regional housing markets with the most price reductions are in the very areas that exploded the most during the pandemic. Do not look beyond Provo, Utah. The market, which is a short drive from many ski slopes, saw a huge influx of remote workers during the pandemic. Between May 2020 and May 2022, house prices rose 65.7% in Provo — well above the 37% increase nationwide in the first 24 months of the pandemic. But as this pandemic housing explosion erupted last month, things quickly changed in Provo. In May, an impressive 47.8% of Provo sellers reduced their list price. This is from 12.2% in May 2021.

Check out this interactive chart at Fortune.com

Just behind Provo was Tacoma, Wash. (where 47.7% of listings received a price reduction). Denver (46.9%); Salt Lake City (45.8%); Sacramento (44.3%); Boise, Idaho (44.2%); Ogden, Utah (42.6%); Portland, Ore (42.0%); Indianapolis (41.9%); and Philadelphia (41.2%).

But make no mistake: These cuts in the list do not mean that house prices are falling on an annual basis across the country. At least not yet. It is normal for house prices to start falling on a monthly basis, as the hot spring market fades and the slower summer months begin. We will have to wait even longer to see if the price will decrease from year to year — which is historically rare — will occur.

Check out this interactive chart at Fortune.com

This national housing market relaxation is planned.

Earlier this year, the US Federal Reserve made it clear it was entering a state of anti-inflation. This has led financial markets to rapidly raise mortgage rates. Over the past six months, the average fixed 30-year mortgage rate has risen from 3.2% to 6.07%. This is bigger than it first looks. If a borrower mortgaged $ 500,000 in December at a fixed interest rate of 3.2%, he would see a $ 2.162 capital and interest payment. At 6.07%, that jumps to $ 3,020 per month in 30 years.

This rise in mortgage rates, combined with the record rise in house prices, has wiped out many aspiring home buyers. Some borrowers, who have to meet strict debt-to-income ratios, have completely lost their eligibility for mortgages. All this devastation of demand was enough to push the US housing market into a state of relaxation.

Even the source of this data has not escaped. Just last week, Redfin announced it would lay off 8% of its staff. The reason? “Redfin revenue shortages, not the people being let go … With May demand 17% lower than expected, we do not have enough work for dealers and support staff,” the company wrote.

Where do we go next? The cooling in the housing market will continue to intensify during the summer months. Freddie Mac Deputy Chief Economist Len Kiefer says we have entered “the most significant contraction in activity since 2006.” As home sales decline and stockpiles increase, it will increase the chances of home prices actually falling from year to year. base.

“I would say that if you are a home buyer or a young person who wants to buy a home, you need a little reset. “We have to go back to a place where supply and demand are back together and where inflation is falling again and mortgage rates are low again,” Fed Chairman Jerome Powell told reporters last week.

If you want to stay informed about the changing housing market, follow me on Twitter at @NewsLambert.

This story was originally featured on Fortune.com

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