A recent Zillow analysis discovered a trend of home price reductions across the United States. The number of homes on the market that have reduced their price to be more appealing to buyers is growing.
In June of this year, 14.2% of U.S. homes listed for sale on Zillow had at least one price cut. That’s up 0.8% from June of 2017. In two-thirds of the 35 largest housing markets in the U.S., the overall number of listings with at least one price cur has risen over the past year.
Home Price Reductions Jump in San Diego and Seattle
In San Diego, out of all active listings in June 2018, 20% of the homes had a price cut. This is a 12% increase from one year ago.
In Seattle, out of all active listings in June 2018, 12% of the homes had a price cut. This is the greatest percentage since October 2014.
Higher Priced Homes See Most Price Cuts
There is a national trend where higher-priced listings have seen a disproportionately large increase in price cuts. This is true in 23 of the 35 largest
In all 35 metro areas, a larger percentage of top-tier listings had at least one price cut than bottom-tier listings. The following metro areas had the largest disparity between shares of listings in the top tier versus the bottom tier with a price cut in June:
What this means is that many more expensive (top-tier) homes are reducing their price as compared to lower priced (bottom-tier) homes in Dallas, Orlando, and Houston. In these markets, the top-tier homes have appreciated too quickly, thus out-pricing the market as no home buyer wants to pay the premium for these homes.
A Shifting Real Estate Market
Home price reductions are a good thing for a healthy, balanced real estate market. While rapid home value appreciation is great for homeowners, it begins to leave out may potential home buyers as home value appreciation
Zillow forecasts home value growth across the U.S. to slow to a 6.6% annual appreciation rate over the next year. Over that past year, the annual appreciation rate of home values has been 8.3%. That’s over a 20% reduction in home value appreciation