The combination of inflation , soaring mortgage rates and high home prices, partly due to low inventory, has left many buyers on the sidelines.
Indeed, the average home price in the U.S. stood at $420,800, according to the Federal Reserve Bank of St. Louis. To put this in context, the median price stood at $329,000 in the first quarter of 2020.
Yet, a recent Realtor.com report found that some expensive suburban real estate markets will become cheaper. In turn, consumers who can afford it should start looking at them as they might undergo further price drops.
Some of these markets are seeing price cuts of up to 36%, as shown by Realtor.com data.
Hannah Jones, senior economic research analyst at Realtor.com , said that several suburban real estate markets saw a falling median price in May, including Albany, Ga., with a 24.2% decrease year-over-year; Greenville, N.C., with a 14.6% decrease year-over-year; and Amarillo, Texas, with a 14.4% decrease year-over-year.
Jones added that the list of falling prices is dominated by metros in the south and that inventory levels have picked up – meaning that the typical buyer is seeing lower prices than last year in some southern markets.
“The increase in the number of homes with price reductions is driven in part by the considerable increase in the number of homes for sale in many Florida markets compared to one year ago,” said Jones, adding that inventory was up an average of 67.3% in large Florida metros in May.
The increased price reductions are driven by more for-sale inventory that meets lower buyer demand.
“Home prices climbed rapidly across Florida during the pandemic,” she said. “Eventually, the combination of prices and mortgage rates meant that buyers could no longer contend in many of these markets. As a result, inventory built up, homes sat on the market longer, and sellers adjusted price in order to drum up some buyer attention.”
Finally, Jones said that this trend will likely continue until housing becomes more affordable, either through lower home prices or lower mortgage rates .
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