Homebuyers Still Struggling as Sellers Offer Price Cuts MABA MassachusettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

According to recent Zillow data, as the home-buying season draws near, buyers are more affected by persistently high mortgage rates than sellers. Most purchasers in the market today have a high probability of seeing a price reduction on their bookmarked listing, even though competition varies significantly by region.

“Homeowners are finally coming back to the market as the effects of rate lock ease over time, but buyers are still struggling with high monthly costs,” said Skylar Olsen, Zillow chief economist. “Sellers are in a good position, and are willing to make price cuts to close a deal. Home equity is near record highs, and the general economy and financial markets are surprisingly strong. Homes are selling faster than they did before the pandemic.” 

Home values have increased two point six percent annually and forty four percent since the pandemic began. The annual appreciation varies greatly across the nation, from a thirty four percent decline in Austin to an eight point one percent increase in San Jose. In January, mortgage rates increased slightly to seven point four percent, the most since May and much higher than the mid-6% rates recorded in the same month the previous year. That caused buyers to struggle with affordability.

Sellers seem less concerned about rate movements. New listings hitting the market from existing owners rose nearly twelve percent year over year. The hold of “rate lock” is weakening over time as homeowners rack up equity and encounter pressing reasons to sell. Zillow surveys of recent sellers show seventy eight percent were influenced by life events to make their decision to sell, such as landing a new job or a change in family size. 

The same survey found just fifty four percent of sellers then bought a home, the lowest share since 2018 and down from seventy percent last year. New listings are rising the fastest year over year in expensive Western markets, led by Portland (up forty eight percent), Seattle (forty percent), Denver (thirty four percent) and San Francisco (thirty two percent).  

Despite the challenges for buyers, plenty of sellers are getting more than they asked for. Nearly twenty five percent of homes that sold in December the latest data available did so for more than the original asking price. That’s compared to about nineteen percent before the pandemic. While high rates are frustrating, buyers have a good chance to find deals on the margins. Zillow’s market heat index shows buyers have more power in negotiations than in any January over the past five years. 

Almost twenty three percent of sellers cut the price of their listing last month, the largest portion for any January since 2018, when Zillow began tracking the metric. The share of listings with a price cut rose the most year over year in Denver, Las Vegas, San Diego and Austin. 

Price cuts are most common in Phoenix, where they’re found on more than one-third of listings (thirty four percent), Tampa (thirty two percent), Jacksonville (thirty one percent), and Orlando and Dallas (both with twenty nine percent). Nationally, homes that sell are typically under contract in thirty eight days. That’s nine days slower than last year but nearly ten days faster than pre-pandemic norms. 

However, regional variation in competition is massive. Homes are selling in two weeks or less in expensive coastal metros like San Jose, Boston, Seattle and Washington, D.C., and far more slowly in the South; New Orleans and Atlanta join Texas and Florida metros with the most relaxed pace of sales.  

To read the full report, click here.

The post Homebuyers Still Struggling as Sellers Offer Price Cuts first appeared on The MortgagePoint.

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