Home prices are responding to buyer demand in many parts of the country, but that doesn’t mean homebuyers can’t still find a bargain, especially for more expensive homes.
According to the latest COVID-19 report from Weiss Analytics, thousands of home sellers are pricing their homes below market levels, even as summer homebuying season is in full force and restrictions on open houses are slowly being eased.
“Sellers are discounting their homes for many reasons,” said Allan Weiss, CEO of Weiss Analytics and cofounder of Case Shiller Weiss. “The sharp decline in April sales motivated many sellers to price their homes to sell. Homeowner equity is at a historic high, and many owe nothing on their homes. They may simply want to sell quickly to trade up or relocate, and that is a choice they can make.”
Although prices have been stabilizing in most markets, existing home sales in April declined 17.8% from March, the greatest decline in a single month since July 2010, this month’s report said.
These discounted prices are sure to draw in more first-time buyers, as the report said that there are discounts in major markets.
San Antonio-New Braunfels; El Paso; and Killeen-Temple, Texas were three smaller Texas markets that lead the U.S. in percentages of properties shown at a discount, the report said. The percent of new listings discounted were 57%, 59% and 54%, respectively.
These markets also shared median prices of $254,977.25, $214,400.00 and $225,062.50, respectively.
Within the top 25 markets with highest percentages of discounted listings, at least 25% have been discounted to lower than pre-pandemic prices, Weiss Analytics said.
“There are also millions of Americans facing unemployment or other financial hardships,” Weiss continued. “They may otherwise be equity rich, so selling is a quick liquidity fix to a big problem. Some people are benefiting from forbearance, enabling them to retain their cash and stay in their homes. While this has contributed to the tight supply and stable or rising prices in many markets, it may also account for the need to sell rapidly if their situation changes.”
Weiss said that after new listings plunged at the outbreak of the pandemic mid-March, new listings are continuing to re-build inventories in some markets, but the discounting is not directly correlated to increased supply.
“There are diverse circumstances for people and communities with many factors at work across the U.S.,” Weiss said. “The best news may be that homeowners have been extremely prudent and built up equity in the past ten years, providing opportunities for graceful transitions and other solutions when needed.”
On the higher end, realtor.com said that May listing prices in Los Angeles-Long Beach-Anaheim, California were up 14.9%; Pittsburgh, Pennsylvania up 14%; and Cincinnati, Ohio-Kentucky-Indiana up 12.1%, posting the highest year-over-year median list price growth.