From January to May 2022, the average cost of buying a home rose 9.5% in the U.S. before cooling to a more modest 0.35% increase from June to July, according to American data. Enterprise Institute Housing Center.
The housing market is evolving due to persistent inflation and economic uncertainty, and with mortgage interest rates soaring to levels never seen in 20 years, it’s a worrying time for Americans looking to buy and sell their property. houses.
In July, 20 US metropolitan areas experienced a drop in their home prices, but this figure more than doubled to 45 metropolitan areas in August, with significant dips in the Sun Belt, despite the surge following the COVID pandemic.
About one in six homes that went under contract in the cities of Sun Belt in August went bankrupt, which equates to about 64,000 homes nationwide, real estate agency Redfin reported.
Buyers were very likely to withdraw from real estate deals in areas such as Phoenix, Arizona; Tampa, Florida; and Las Vegas, Nevada. These cities typically saw a rise in prices during the pandemic.
By contrast, shoppers in expensive coastal metropolitan areas like San Francisco and New York City were reported as the least likely to withdraw from the deals. Redfin analysts said this could be due to the return of office work.
Home prices in the Midwestern metropolitan areas showed significant declines in August, as prices in Omaha, Nebraska fell 3.5% from July, while those in Cincinnati, Ohio and St. Louis, Missouri, were decreased by 1.5%.
Home prices in Kansas City, Missouri also fell 1.3 percent. In Philadelphia, Pennsylvania, they lost 1.2%.
Properties in Salt Lake City, Utah have seen the biggest price rebounds this year. Despite falling house prices in February and May, they made big gains during the first half of the year, jumping 15% overall, before plummeting 3.5% in August.
The west coast sees the biggest drop in house prices
Many metropolitan areas experienced a third or fourth consecutive decline in August, with the vast majority in California, due to the increasingly inaccessible cost of shelters in the Golden State.
San Jose experienced the sharpest reversal in house prices. After peaking of 9.3% from January to April, they have fallen by 11.7% over the past four months.
The subways with the largest house prices drop in August
- Seattle, WA
- Las Vegas, NV
- San José, California
- San Diego, California
- Sacramento, CA and Denver, CO (tie)
- Phoenix, Arizona
- Oakland, CA
- North Harbor, Florida
- Tacoma, WA
San Diego and Los Angeles haven’t been far behind, with prices dropping 2.5% over the past three months. San Francisco broke the trend and made slight gains in August, but the subway has lost 4.8% overall since May.
Other West Coast metros have experienced dips in recent months. Prices in Portland, Oregon have fallen 2.7% in the past three months, with Denver, Colorado and Seattle, Washington among the biggest losses, down 3.0% and 6.4% respectively since April.
In Las Vegas, Nevada, and Phoenix, Arizona, year-on-year prices rose 25% in May, but fell 2.5% and 2.1% respectively over the past three months.
Florida led the market’s appreciation for most of the year, posting increases every month through August. But the Sunshine State began to see a decline as prices in Jacksonville fell 1.7%. They fell 1.4% in Orlando and Miami, 1.3% in Cape Coral and 0.7% in Tampa.
The drop in prices may seem extreme compared to the two-year pandemic frenzy that saw a shortage of listings and increased demand for properties, leading sellers to receive more offers and prompting buyers to place high bids.
Home listings are reportedly going on longer as demand slows and, as mortgage interest rates rise, homeowners who don’t have to relocate stay put. A recent report from real estate market firm Zillow Group Inc. shows that new listings fell nearly 23% in August from the previous year.
According to a recent Redfin report, the Seattle housing market, one of the metropolitan areas cooling faster than any other, saw demand for properties declining, with about a third fewer homes sold in two weeks in August than a year earlier.
Seattle Redfin agent David Palmer said in the report, “Many sellers are unable to get the price they want because buyers don’t want to compete with other offers when mortgage rates are double what they were a year ago. .
“That means there are fewer sellers listing their homes and fewer buyers bidding on those that hit the market.”
Redfin chief economist Daryl Fairweather added in the report that many are simply missing out on the price of metropolitan areas.
He said: “These are all places where home buyers feel the sting of rising house prices, higher mortgage rates and inflation very acutely.
“They are slowing down partly because so many people have been devalued and partly because last year’s record rates made them unsustainable.
“The good news is that the slowdown is dampening competition and giving those who can still afford to buy more bargaining power.”