Around a quarter of homeowners who have put their homes up for sale since the coronavirus outbreak have priced them below pre-pandemic price levels. According to the latest Weiss Analytics data (opens in new tab), some sellers have trimmed their asking prices by up to 20% as they look to secure a sale in uncertain times, and are creating market conditions that are more friendly to buyers in the process.
The analysis - which takes account of listings in the nation’s 30 largest markets - found that around one in four new listings had asking prices below their properties’ values in February, with homes priced higher than $600,000 more likely to be discounted than less expensive homes. Indeed, some 37% of sellers with houses worth over $600,000 have set their prices below pre-pandemic levels, and are offering a median discount of 7.7%.
"These higher discounts for more expensive homes, and current relative strength for lower priced houses is significant,” said Allan Weiss, CEO of Weiss Analytics and co-founder of Case Shiller Weiss. "The implosion of the non-qualified mortgage market is contributing to softer demand and more discounting by sellers at these higher price levels."
More opportunities for buyers
Discounts are less prevalent for lower-priced properties, with 30% of homes priced at $200,000 or below currently costing less than before the coronavirus struck. The median discount of 6.3% is also lower too, but after 97 straight months of year-over-year gains, first-time buyers and property investors will welcome the respite, even if it proves to be temporary.
The monthly house price inflation recorded unrepentantly over the past eight years has made it hard for those wanting to step onto the property ladder to save for down payments, while investors have struggled to find profitable rentals. However, cheaper asking prices, combined with the historically low mortgage rates currently available from the best mortgage lenders (opens in new tab), should throw up greater opportunities for new buyers and investors.
"To some degree it is win-win for would-be entry level buyers if prices become more realistic, people maintain their incomes and can borrow to purchase," adds Allan Weiss.
Where are the best discounts?
As to where the highest average discounts can be found, Pittsburgh (20%), Baltimore (10%), and San Antonio (10%) lead the way, as the following rundown of the most discounted markets reveals.
|Market||Percentage of new listings discounted||Average discount value change|
|San Antonio-New Braunfels, TX||-15.20%||-10%|
|St. Louis, MO-IL||-1.20%||-9%|
|Houston-The Woodlands-Sugar Land, TX||-25.90%||-8%|
|New York-Newark-Jersey City, NY-NJ-PA||-59.90%||-8%|
|Kansas City, MO-KS||-1.40%||-7%|
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