Top 5 Cities for Price Cuts in 2022
By: Charles Sells
A quarter of the way through 2022 the housing market appears to be on the precipice of something big. That “something big” could be another 20 percent year-over-year price gain (that’s what the big news was in March), but it seems more likely that we will begin to see some cooling in some regional and local markets. According to information from Zillow, Redfin, and other data hubs, that cooling may already be underway in certain areas of the country.
One of the biggest indicators that a market might be changing is the most obvious: price cuts. If these are occurring in rising volumes or if they are substantial (more than $5,000 on average), it can be a clear sign that something is changing in the market. In the five cities listed below, the average price cuts are far higher than $5,000 and the average amount of a price-cut is more than $15,000. For a national market that has been skyrocketing upward for years and local markets that have been in serious demand, this could signal a major change in the overall housing environment.
“If sellers are increasing the amount that they are cutting the price of their home, that is a sign that they are getting desperate and wanting to bail out of the housing market before it crashes,” said Nicholas Gerli, CEO of real estate data analytics firm Reventure Consulting, during recent commentary on the numbers. He added, “This is a trend that is a occurring…as one of the early warning signs of a housing crash.” Gerli recently called Boise, Idaho, the “biggest housing bubble” in the United States and warned this market, in particular, could be close to crashing.
However, it bears noting that the housing market has several underlying factors today that it did not have during the last housing crash. First of all, although sellers may be trying to sell at the top of the market in order to not lose perceived “money earned” during the housing boom and COVID-fueled fast-track appreciation, it does not necessarily mean they are desperate because they cannot pay their mortgages. In fact, most financial analysts say the lending market is relatively sound despite concerns about pandemic-related forbearance expiration and the potential for associated foreclosures. Instead of a crash, this could be simply a sign that the housing market is getting back to normal.
In that case, real estate investors should be watching markets trying to return to “ground level” for potential investments and profits.
The top 5 cities for price cuts at present are:
- New York City – average price cut, $66,848
- Sarasota, Florida – average price cut, $41,998
- San Jose, California – average price cut, $93,050
- San Diego, California – average price cut, $60,930
- Boston, Massachusetts – average price cut, $45,857