Thousands of home sellers are pricing their homes below market levels, creating opportunities for bargain-hunting real estate investors and first-time buyers, according to the latest COVID market report from Weiss Analytics.
Over the past eleven weeks, discounted prices for large shares of new listings in some markets ranged from 2 to 11 percent below market prices before March 11, when the World Health Organization declared a pandemic. Even though prices have stabilized or appreciated in most markets, existing sales in April declined 17.8 percent from March, the greatest decline in a single month since July 2010.Both large and small markets experience discounting
Three smaller Texas markets, El Paso, San Antonio-New Braunfels, and Killeen-Temple, lead the nation in the percentages of their properties priced at a discount. The top 25 markets also include major markets in states shut down by the pandemic such as New York City, St. Louis, and Baltimore. In the top 25 markets with the highest percentages of discounted listings, at least one-quarter of all new listings have been priced lower than pre-pandemic prices.
For Investors and first-time buyers who have struggled with rising prices and shrinking inventories of affordable homes for the past four years, the discounted properties may provide opportunities. The pandemic slowed price growth in most markets and lowered forecasts for the balance of 2020. Discounting is creating bargains even in markets where median prices are rising.
"Sellers are discounting their homes for many reasons. 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," said Allan Weiss, CEO of Weiss Analytics and co-founder of Case Shiller Weiss.
Weiss noted that after new listings plunged at the outbreak of the pandemic in mid-March. New listings are continuing to re-build inventories in some markets, but the discounting is not directly correlated to increased supply, he said.Homeowners have flexibility
"There are also millions of Americans facing unemployment or other financial hardships. 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.
"There are diverse circumstances for people and communities with many factors at work across the US," said Weiss. "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. Weiss Analytics provides updated data on more than 400 markets
Homeowners, real estate investors, lenders, and homebuyers can find the latest data and market updates on the Weiss Analytics
site, including lists of markets with discounts. Visitors can also find market values and forecasts for millions of individual homes in the Weiss Analytics repeat sales indexes.