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Prices cut on 12% of homes for sale: What city has the most discounts?

”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.

Buzz: The pandemic era’s quickly cooling housing boom turned many cities where home-price gains have been the biggest into the markets where it’s more likely a wannabe seller is cutting their asking price.

Source: My trusty spreadsheet’s analysis of a Zillow report on May’s home-selling conditions in the nation’s 50 largest metro areas — concentrating what’s behind reductions in listing prices. The market clearly is softening, to use a polite phrase, as a combination of high prices and soaring mortgage rates created too many unaffordable options for house hunters.

Top line

In Los Angeles and Orange counties, 10% of homes listed for sale in May had reductions in the asking price — but that ranked only the 33rd highest share of the 50 metros. In the Inland Empire, 13% of listing had price cuts — 12th highest. Nationwide, price cuts were found on 12% of all listings vs. 8% in February.

May’s highest? New Orleans and Salt Lake City at 16%, and Sacramento at 15%. Fewest? Virginia Beach, Boston and San Jose at 8%.

Details

Look at the 50 metros, sliced into thirds by a ranking of price cuts.

Asking price reductions were more likely to occur where home values had greater appreciation. The 16 metros with the most price cuts had home values up an average 24% in a year vs. 18% in the 16 metros where price cuts are rarest. Sellers have may have misread the durability of recent price gains.

L.A.-O.C. had the No. 22 gain, up 21% over 12 months. The Inland Empire was No. 15 at 26%. Nationwide? 24%.

Raleigh and Tampa had the largest appreciation of the 50 at 37%, then Orlando at 33%. Smallest increases? Washington at 10%, Baltimore at 11%, Milwaukee and Pittsburgh at 12%.

Owners are adjusting prices more frequently as fewer sales contracts are signed. So-called “pending sales” fell an average 21% the past year in metros where the most price cuts fell vs. down 19% where price cuts were least seen.

L.A.-O.C. pending sales were down 24% in the last 12 months, and that was 13th biggest drop. The Inland Empire was off 17%, the 15th smallest dip. Nationwide? Off 20%.

Biggest falls is dealmaking were in Salt Lake City, down 38%, Miami, down 33%, and Hartford, down 31%.  Just two markets had gains in pending sales — Birmingham, up 6%, and Memphis, up 5%.

Bottom line

Some sellers are feeling the house hunter’s financial pain — and discounting their listings to meet shrinking demand.

Zillow estimated what monthly payment a buyer might get in May in each of the 50 metros — principal, interest, taxes and insurance for the typical home, assuming a 30-year fixed-rate loan with a 20% downpayment at 5.23% vs. the 2.96% rate of a year earlier.

Again, discounts followed bad news. Metros with the most price cuts had average hikes in projected payments of 52% vs. 44% where discounted listings were harder to find.

L.A.-O.C.’s payment jump was 52% — and it was only the 19th largest hike! The Inland Empire was No. 14 at 56%. Nationwide? 47%.

Raleigh topped this ranking at 70%. Then came Tampa at 66%, and Las Vegas at 65%.

Even the nation’s “smallest” payment leaps were scary. Milwaukee was 34% pricier over 12 months, Pittsburgh was up 35%, and Hartford and Minneapolis rose by 37%.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com


Source: Orange County Register

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