A slowdown in home price growth and a shift in pricing power from sellers to one that more closely aligns with buyers expectations will “drive an unusual surge in home sales this fall,” predicts analysts at the real estate brokerage Redfin in its latest housing report.
“Home buyers who have been willing to wait for better deals are starting to be rewarded for their patience, as sellers drop listing prices to meet buyers’ more value-focused expectations,” Redfin notes in its latest report.
The number of homes that sold above list price in July was down nearly 7 percent to 20.1 percent from 26.8 percent a year ago, according to Redfin’s analysis.
“Sellers are finally catching on that it’s not a seller’s market anymore,” says Jeremy Cunningham, a Redfin real estate professional in Virginia.
Sellers are adjusting their prices, particularly in markets that have seen a large increase in for-sale inventories or big increases in home price appreciation over the past year.
According to Redfin, Denver is the metro that has registered the largest percentage of listing price drops. Its median sales price has increased by 15 percent year-over-year compared with an average of 5.5 percent for all metros.
On the other hand, Ventura County and Sacramento, Calif., have seen more moderate price growth year-over-year but have seen their for-sale inventories rise by 25.6 percent and 18.3 percent, respectively. The two metros had the second and third largest percentage of homes for sale with price drops in July, according to Redfin.
Some of the metros with the fewest price drops tended to have smaller increases in median home prices and for-sale inventories, analysts note. On the other hand, some West Coast markets like San Francisco, San Jose, Los Angeles, and Seattle continue to sell for more than list price.
Get Ready for a Hot Fall?
Redfin analysts are predicting a surge in home sales in September and October.
“We continue to see strong buyer demand as we head into fall,” according to Redfin’s housing report, which shows the number of tours and offers picking up from July and into August. “The buyer fatigue from competing against multiple offers, bidding wars. and tight inventory is diminishing. Additionally, the widespread increase in price drops is likely to give buyers even more confidence that they have regained some of the bargaining power lost last year.”
Also, analysts note that borrowing costs still remain attractive, which will help buyers off the fence.