Waning Pandemic Provides Home Sellers a Reality Check in West

A reality check continues to hit sellers in the once-strong markets such as Boise, Sacramento, parts of Utah, and other mid-sized western markets are increasingly seeing prices falling.

Migration spurred by the pandemic was the general reason for rising prices in those markets, competing with locals for a limited supply of homes, but that impetus has softened.

They must adjust their expectations as they realize many buyers can no longer afford the type of home they could before mortgage rates shot up recently, Redfin reported.

Boise Redfin agent Shauna Pendleton said in prepared remarks, “Many buyers are backing out of the market—and even backing out of deals—and some sellers are responding by dropping their price.”

This follows last week’s report by Redfin that downward trends are accelerating in home-buyer markets with competition for homes falling to a 15-month low.

One agent in the typically hot Nashville market said homes are now getting one to three offers, compared with five to 10 two months ago and as many as 25 to 30 six months ago.

There Are Two Kinds of Sellers

“There are two kinds of sellers in today’s market: Those who already know the market has cooled, and those who are learning about the cooling market as they go through the selling process,” Redfin chief economist Daryl Fairweather said in prepared remarks. 

“The former wants to sell quickly before the market slows further and they’re willing to price slightly below comparable homes in their neighborhood right away, and the latter may have to drop their price if their home doesn’t attract buyers within a few weeks. As more sellers come to terms with the slowing market, fewer homes will have price drops.”

In Provo, Utah, for example, nearly half (47.8%) of its homes had price drops in May. Tacoma, Wash., had the same in 47.8% of its homes, followed by Denver (46.9%), Salt Lake City (45.8%), Sacramento (44.3%) and Boise (44.2%)