Photo: Robert Clark
It’s been a seller’s market in the US for years, but the housing market is starting to show signs that the balance of power could be tipping.
The share of listings that had a price cut is greater today compared to a year ago in two-thirds of the county’s largest markets, according to a report released yesterday by the listing site Zillow.
“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,” writes Zillow senior economist Aaron Terrazas, in a statement.
Nationally, nearly 14 per cent of all listings had a price cut in June. This was up nearly 3 percentage points from a recent low of 11.7 percent towards the end of 2016.
Since the beginning of this year, the share of listings with a price cut has grown by 1.2 percentage points — the greatest January-to-June increase ever recorded by the site, and more than twice the January-to-June increase recorded in 2017.
On the national level, price cuts are more common in upper-tier or luxury listings, with 16.2 percent of all high priced listings seeing price cuts in the first six months of 2018 compared to 11.2 percent of lower-priced listings.
The amount of the price cut has remained at around 3 percent for the past several years.
Markets on the West Coast saw the greatest increase in price cuts. The West Coast is home to some of the priciest housing markets including San Jose, CA, Seattle, WA and San Diego, CA.
For example, 20 percent of all listings in San Diego had a price cut in June, up from 12 percent a year ago at the same time.
In Seattle — one of the country’s fastest appreciating housing markets, despite a recent slowdown — some 12 percent of all listings had a price cut, the greatest share recorded since October 2014.
“Sellers have been able to price aggressively in hot markets the last couple years but at some point buyers wouldn’t be able to match these high prices,” Terrazas tells Livabl.
Listings in some of the country’s more affordable markets — like San Antonio, TX and Phoenix, AZ — saw fewer listings with price cuts in June compared to last year.
The median home price rose 8.3 percent year-over-year to $217,300 in June, and while price appreciation isn’t slowing nationally it is decelerating in some of the hotter markets.
“The housing market is still strong with home values continuing to rise, albeit at a slightly slower pace in some markets. But affordability and inventory remain major concerns for those looking to buy,” says Terrazas.
And, while the market is still very much a seller’s market, it’s going to take more than increased price cuts to shift the balance.
“The main need is for increased inventory to meet demand from buyers. That would ease some of the upward pressure on prices and give buyers more negotiating power,” says Terrazas.
Click here to read the entire report.