With demand strong and supply weak, the housing market is overwhelmingly partial to sellers. The average homeowner is profiting $40,000 at resale (with decade-high returns in 2017), and higher in the hottest markets, where they’re attracting multiple offers in record time.
Now, there’s an early indicator that the market may shift. At the start of summer, 14.2 percent of listings nationwide had their prices reduced, according to a new report by Zillow. At the beginning of the year, 13 percent had cuts, and at the close of 2016, 11.7 percent were lowered. The increase between January and June is the largest on record in the report, and doubled the jump in the same six months in 2017.
The bigger bounds are generally on higher-priced properties, and on the West Coast, the report shows. Of costlier listings, 16.2 percent have been slashed since the start of the year—up 0.9 percent. By comparison, 11.2 of lower-priced properties have been reduced—down 0.1 percent. The disparity illustrates the immense interest in more practically priced properties, which are in scarcer supply.
The amount of discounted homes increased the most in San Diego, up 7.7 percent in the last six months, to 20 percent. The amount climbed in Denver, Las Vegas, Orlando, Portland, Ore., Sacramento and Seattle, as well. On the flip side, the share shrank in Philadelphia, from 17.2 percent to 16.2 percent, as well as in Indianapolis, Pittsburgh and San Antonio.
Is the change a change in dynamic? According to Aaron Terrazas, senior economist at Zillow, the concessions could be a premature sign of a swing, but not yet.
“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,” says Terrazas. “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 outsized price gains in recent years.
“It’s far too soon to call this a buyer’s market,” Terrazas says. “Home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”