About one out of four home sellers who listed their homes for sale since the outbreak of the coronavirus pandemic have priced them at discounts below pre-pandemic price levels. The lower prices are creating market conditions that are more friendly to buyers, according to a new analysis of the nation's 30 largest markets by Weiss Analytics.
Homes priced higher than $600,000 are more likely to be discounted than less expensive homes. Sellers of some 37 percent of houses worth over $600,000 have asking prices below their February values, with a median discount of 7.7%. The market share of higher-priced listings that are discounted has increased every week since the pandemic slowed real estate sales in March. New listings for these houses have outpaced sales by 3 to 1.
Markets with the highest percentage of new listings discounted since February are New York (34 percent of new listings), Baltimore (31 percent of new listings), and Los Angeles (30 percent of new listings). Price discounting less prevalent for lower-priced homes
Homes priced at $200,000 or less have fewer discounted listings, about 30 percent, and the median discount is also lower at 6.3%. Weiss Analytics found that list prices for entry-level properties are supported by tighter supply with new listings exceeding sales at rates of only 1.5 to one.
After 97 straight months of year-over-year gains, first-time buyers and investors have a reprieve, at least temporarily, from monthly price inflation that has made it hard to save for down payments or find profitable rentals. Pandemic prices help buyers
"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-QM mortgage market is contributing to softer demand and more discounting by sellers at these higher price levels," said Weiss.
"The future value of entry-level homes faces important uncertainties particularly whether re-opening communities can be sustained so we have an employment recovery. 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."
The top three markets with the highest average discounts are Pittsburgh (20 percent), Baltimore (10 percent), and San Antonio (10 percent). Weekly market updates to track the recovery
To help owners, buyers, investors, and lenders follow the new market reality, Weiss Analytics will release weekly market updates on the Weiss Analytics
site beginning next Wednesday, May 20.
As housing markets evolve, homeowners, agents, and lenders will be able to track individual properties as well as micro-market trends on Weiss Analytics.