Where prices are coming down and buyers may have the upper hand

The days of being able to sell a home and getting multiple offers over-asking price are in the past in many parts of the country. The frenzied bidding wars that drove home prices up at a fast pace have come to a peaceful conclusion. We’re now seeing a market correction in the form of price cuts to homes already on the market.

When a homeowner puts their house on the market, they set an asking price that represents both what they think the home is worth, and what they’re hoping to get for it. When they find that the interest for their home at that price isn’t as high as they’d like it to be, they will often reduce their asking price, also called a price cut. Let’s look at why this can be good news for a potential homebuyer.

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Price cuts are good news, usually

When a homeowner cuts their asking price, it usually is a disappointment for the seller. But it’s also an honest reflection of where their local market is heading in terms of home values.

For you, the potential buyer of that home, this can be good news. But here are a few things that you need to watch out for that could have led that homeowner to drop their asking price:

There could be something wrong with the house

Maybe a previous buyer put in an offer and then found a red flag with the home during the inspection phase . If the owner didn’t want to pay to fix the issue, they could decide to simply lower their asking price instead.

Ask your agent to find out if this is what lead to the price reduction, as you’ll want to know that before making an offer yourself.

Seller is drumming up more competition

From the seller’s perspective, lowering their asking price is one way to make their property more attractive to potential buyers. Not just you, but everyone in your area who’s looking for homes just like you. You’ll even hear stories about homes that have gone through a price cut only to end up in a bidding war. Most listing sites will highlight homes that have recently had their price reduced in search results, certainly attracting a greater number of eager buyers.

So you should know that price reductions could stir up more competition, and you’ll want to move fast if it’s a home you like. Our Same Day Mortgage technology can help you stay a step ahead of the competition.

Where home prices are getting cut

With all of that said, there are certain parts of the country where home prices are more likely to be cut right now than others. This could be to many different factors, but your area’s local economy plays a big part in that. How many people in your area are employed, if salaries are rising and other issues like these can affect your local housing market, and by extension, price reductions.

We took a look at data from the Realtor.com® Economic Research team analyzed the top 150 housing markets across the country, and picked out the ones that showed the greatest increase in price reductions from March of 2023 to March of 2024. Also included in our analysis is a comparison of price cuts from February 2024 to March 2024, to see if these trends are continuing.

1. Fort Wayne, IN

Median home price:                                              $324,900
Percentage increase in price cuts from last year:     127.3%
Increase in cuts from last month:                              4.2%

Fort Wayne, Indiana was recently listed as one of the more in-demand areas in the U.S. So it’s surprising to see that it tops the list of the highest amount of price cuts from a year ago. Perhaps the notoriety of landing on the most in-demand list caused sellers to raise asking prices higher than prices that buyers were willing to pay?

2. Portland-Vancouver-Hillsboro, OR-WA

Median home price:                                              $605,000
Percentage increase in price cuts from last year:     121.5%
Increase in cuts from last month:                              14.3%

Once the hip darling of the mid-2010’s, Portland, Oregon (not to be confused with Portland, Maine below) has made headlines for local challenges over the last few years. Perhaps that’s why sellers are finding that they need to lower their asking prices. Though with a higher median home price, this Pacific Northwest gem still is seeing their home values remain firm.

3. Portland-South Portland, ME

Median home price:                                              $622,700
Percentage increase in price cuts from last year:     106.7%
Increase in cuts from last month:                              0.0%

4. Eugene-Springfield, OR

Median home price:                                              $525,000
Percentage increase in price cuts from last year:     106.3%
Increase in cuts from last month:                              -1.5%

5. Cape Coral-Fort Myers, FL

Median home price:                                              $474,100
Percentage increase in price cuts from last year:     105.1%
Increase in cuts from last month:                              8.9%

You’ll notice that cities in Florida occupy not just this spot, but also the 8th, 9th, 10th, 12th, 13th, 14th, 15th and 17th spots on this list. That’s a lot of price cuts in just one state. This is partially explained by the fact that Florid is among the states that built the most new homes last year, so that extra supply is reducing demand for homes, pushing prices down.

The chief economist for Florida Realtors, Brad O’Connor, also told Newsweek that there was a lot of uncertainty in the Florida market , and sellers were struggling to price their homes correctly. "I think initially when rates rose quickly, people were uncertain as to where they would go from there," he said. "But now we're pretty much in a situation where I think everyone is comfortable with the idea that rates are probably going to stay about where they're at, or they're going to decline somewhat in the next year or two."

6. Gainesville, FL

Median home price:                                              $349,000
Percentage increase in price cuts from last year:     102.4%
Increase in cuts from last month:                              30.3%

7. Augusta-Richmond County, GA-SC

Median home price:                                              $304,500
Percentage increase in price cuts from last year:     98.6%
Increase in cuts from last month:                              10.8%

8. Tallahassee, FL

Median home price:                                              $320,000
Percentage increase in price cuts from last year:     94.2%
Increase in cuts from last month:                              11.7%

9. North Port-Sarasota-Bradenton, FL

Median home price:                                              $515,000
Percentage increase in price cuts from last year:     88.5%
Increase in cuts from last month:                              10.7%

10. Naples-Marco Island, FL

Median home price:                                              $849,000
Percentage increase in price cuts from last year:     85.9%
Increase in cuts from last month:                              10.7%

11. El Paso, TX

Median home price:                                              $299,500
Percentage increase in price cuts from last year:     81.2%
Increase in cuts from last month:                              16.8%

Home sales have fallen to their lowest level in seven years, according to Texas Realtors. This is driven in part by new home construction, helping to moderate the upward growth of homes. Also, the cost of home insurance is rising in Texas due to the effects of climate change, which is another affordability hurdle for homebuyers.

12. Palm Bay-Melbourne-Titusville, FL

Median home price:                                              $388,283
Percentage increase in price cuts from last year:     80.3%
Increase in cuts from last month:                              12.5%

13. Tampa-St. Petersburg-Clearwater, FL

Median home price:                                              $419,000
Percentage increase in price cuts from last year:     80.0%
Increase in cuts from last month:                              14.5%

14. Miami-Fort Lauderdale-Pompano Beach, FL

Median home price:                                              $549,000
Percentage increase in price cuts from last year:     74.6%
Increase in cuts from last month:                              14.5%

15. Orlando-Kissimmee-Sanford, FL

Median home price:                                              $439,000
Percentage increase in price cuts from last year:     72.6%
Increase in cuts from last month:                              6.2%

16. Myrtle Beach-Conway-North Myrtle Beach, SC-NC

Median home price:                                              $346,900
Percentage increase in price cuts from last year:     70.4%
Increase in cuts from last month:                              2.1%

Many of the markets listed here are known as great vacation destinations. Therefore, it’s possible that some of the homes for sale in these markets were originally priced as possible vacation rentals/investment properties. But revenue in short-term rentals fell in 2023, according to AirDNA, and this may have affected what prices sellers were able to get from buyers interested in becoming a rental host.

17. Lakeland-Winter Haven, FL

Median home price:                                              $349,950
Percentage increase in price cuts from last year:     69.3%
Increase in cuts from last month:                              13.5%

18. Vallejo, CA

Median home price:                                              $585,000
Percentage increase in price cuts from last year:     69.2%
Increase in cuts from last month:                              13.5%

19. Omaha-Council Bluffs, NE-IA

Median home price:                                              $402,418
Percentage increase in price cuts from last year:     68.5%
Increase in cuts from last month:                              -2.2%

20. Montgomery, AL

Median home price:                                              $309,900
Percentage increase in price cuts from last year:     67.6%
Increase in cuts from last month:                              20.4%

Making the most of local conditions

Remember, a price cut isn’t necessarily a bad thing for a home or for a housing market. It’s really just a market correction, a chance for the seller to align their asking price more closely with the demand that’s currently in the market. And that’s why these price reductions are so dependent on the conditions in their local markets. Which makes working with local experts like a real estate agent and loan officer key to making the most of the price reductions in your area.

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