- A higher number of home sellers are reducing their asking prices these days
- Portland, OR; Milwaukee; Pittsburgh; and Austin had the most reductions
- It’s another sign that the real estate market is cooling down a bit
- Even so, these (and most other) housing markets still favor sellers
For many months now, home sellers across the U.S. have pretty much had their way. Tight inventory conditions and strong competition among buyers have benefited sellers greatly. Selling a house has never been easier. Just put it on the market and wait for the offers to roll in.
But a spate of recent housing market reports suggest that might be changing. Among other things, recent data show that more and more sellers are reducing their asking prices in order to attract buyers.
Surprisingly, some of the hottest housing markets have experienced the most price reductions among sellers. These include Austin, Texas and Portland, Oregon.
It’s just another sign that the real estate market is starting to cool down a bit, after more than a year of overheated home-buying activity.
Housing Markets With the Most Price Reductions
Last week, the research team from Realtor.com published a housing market update with data through the end of September 2021. It contained real estate stats and trends for the nation as a whole, along with the 50 largest metro areas.
(Note: This report was based on property listings on the Realtor.com website, which is possibly the biggest listing site in the country. So it offers good insight into the U.S. housing market as a whole.)
Among other things, this latest report showed the percentage of property listings that involved a price reduction in September 2021. As it turns out, more and more sellers across the country are cutting their list prices.
To quote the Realtor.com report:
“In further signs of some sellers competing more for buyers, the share of active listings with price adjustments grew for the second month in a row in September, up 1.5% year-over-year to 17.9% of active listings.”
Translation: Sellers in many housing markets are now having to work harder, and be more flexible, in order to attract offers from buyers. That’s quite a shift from where we were six months ago.
Most of the 50 metro areas contained within this report had a price reduction percentage or “share” of 15% or greater. And in some real estate markets, the reduction share was 25% or more.
Here are the five housing markets with the highest “price reduced share” in September 2021:
- Portland-Vancouver-Hillsboro, Ore.-Wash. (28.9%)
- Milwaukee-Waukesha-West Allis, Wis. (26.5%)
- Pittsburgh, Pa. (25.8%)
- Austin-Round Rock, Texas (24.5%)
- Columbus, Ohio (24.5%)
It’s not surprising to find Midwest real estate markets like Columbus and Milwaukee at the top of the rankings. But Portland, Oregon and Austin, Texas are a different story. Both of these housing markets — and especially Austin — have been pretty hot over the past year.
Portland, Oregon: ‘Optimal’ Home Buying Conditions
For the past year or so, the real estate market in Portland, Oregon has experienced low inventory levels and fast home sales. And while most of the conditions remain to this day, there appears to be a shift occurring in terms of list prices.
Of the 50 metro areas contained within the above-mentioned Realtor.com report, Portland had the highest percentage of price reductions. In September, nearly 30% of real estate listings had at least one price reduction.
This could be a sign that the Portland real estate market is cooling down. Or it could be a seasonal blip. The most likely scenario is a little of both.
According to a separate Realtor.com report, published in mid-September, the Portland real estate market just went through its “optimal” home-buying season with the best deals.
To quote that report (with bolding added):
“This week [September 13] kicks off the season with optimal home buying conditions in New York, Los Angeles, Boston, Denver, Detroit, Minneapolis, and Portland.”
This partly explains the relatively high percentage of price reductions across the Portland-Vancouver metro real estate market. But there could be more to the story. We could also be seeing signs of “buyer fatigue,” following a year of rapid price growth.
The median home value in Portland, Oregon rose above the half-million mark earlier this year, according to Zillow. That has priced many buyers out of the housing market altogether, thereby reducing demand. So it would make sense that the Portland real estate market is cooling down a bit, as we move further into the fall of 2021.
Austin, Texas: A ‘Calming’ Trend in the Texas Capital
The Austin metro area has experienced explosive population growth over the past few years, and this has shifted the local housing market into turbo mode. Tight inventory and soaring demand from buyers have boosted home prices by an unprecedented amount (more than 40% in the past year alone, according to Zillow).
So it’s a bit surprising to see such a high percentage of sellers reducing their asking prices within the Austin-Round Rock metro area. As with Portland, Oregon, this might be another seasonal fluctuation. Or it could be the start of a more sustained cooling trend.
The Austin real estate market stood out for another reason in Realtor.com’s September report. Of the 50 metros that were analyzed, the Austin-Round Rock metropolitan area had the biggest increase in new property listings during the month of September.
These things are connected. With more homes coming onto the market, sellers face more competition. This in turn leads to price reductions.
New listings within the Austin-Round Rock metro real estate market rose by 19.9% in September, compared to a year earlier. Only Portland, Oregon came close to that, with a 16.3% year-over-year increase in new listings. In most other metro areas, new listings rose by a much smaller amount — or even declined — over the past year.
This suggests that the supply shortage within the Austin real estate market could be improving. If these trends continue going forward, the local housing scene could cool down slightly in 2022. (Emphasis on “slightly.”)
According to Austin Board of Realtors president Susan Horton:
“The region’s housing market is calming compared to the hectic pace experienced at the beginning of the year.”
But she added that it’s still a highly competitive real estate scene, with most homes “selling as soon as they hit the market.”
The takeaway from all this? Most cities across the country still favor home sellers over buyers, due to tight inventory conditions. But little by little, the real estate market is becoming more buyer-friendly.