Half of all homeowners report slower home-buying season

It’s been called the most competitive home-buying season ever and the strongest seller's market ever. Whatever you call it, it cannot be denied that 2017 gave us one of the hottest housing markets recorded in American history. In competitive markets such as Seattle, San Diego and Dallas, there were reports after reports of all-cash buyers bidding over-asking and losing out on a home purchase, repeatedly. Open houses with over 100 attendees within a two-hour window were not uncommon.

Recent reports tell a slightly different story. In San Diego, 20% of all listed homes had a price cut in June. In Seattle, where bidding wars had become the norm in the past three years, market watchers are starting to see 6-figure price drops for median-price homes. In Dallas, 19% of all listed homes had seen their prices cut at least once in June. These are previously unheard of in recent years. It appears expensive home prices have reached a tipping point and the pendulum could be reversing course in some of these previously red-hot markets.

Homeowners, who are typically more informed and aware of the latest market conditions in their neighborhood compared to new homebuyers, appear to have taken note. In the latest ValueInsured Modern Homebuyer Survey:

  • Nearly half (48%) of all homeowners report noticing lighter open-house traffic and a less competitive home-buying season in their neighborhood this Spring compared to Spring 2017
  • 54% of all homeowners in California also reported lighter home-buying demands
  • 56% of all homeowners in Colorado and 53% in New York state reported noticing the same in their neighborhood

After three years of double-digit price gains in the nation’s top housing markets where wage growths are not close to keeping pace, what goes up eventually tend to come down. There are increasing signs of a cooling market and savvy buyers need to rethink their strategy. While buyers have been conditioned to hurry up and make an offer, even sight-unseen, in recent years, some may now step back onto the sidelines to wait and see if – and how far – home prices could get cut before they jump back in. As buyer enthusiasm cools, sellers could panic and cut even further and faster, and the ripple effect continues, not unlike how the market run-up first began.