Where Are Sellers Lowering Prices?

As homebuyers pull back in response to rising mortgage rates rise and persistent inflation, sellers are doing something they haven’t had to do over the past 2 years—cutting their asking price. Across the Mid-Atlantic region, more than one out of every three homes listed for sale has had a price reduction. Sellers who overshoot their asking price are beginning to see their property linger on the market as buyers have less competition and more options on the market.

Sellers in the Washington DC metro area are slightly more likely to be dropping prices than are sellers in other Mid-Atlantic metro areas. Nearly 40% of homes currently listed for sale in the Washington area have had a price reduction. Properties with a price cut in the Washington DC region have been on the market for an average of 63 days. By contrast, in June the typical home in the metro area sold in an average of 14 days.

Sellers in all markets may reach too high with their list price if they look at recent sales and expect to see prices continue to rise at the same rate we’ve been seeing over the past year. Sales price growth has already slowed in most local markets. Competition for properties is easing—instead of five or six offers, homes are receiving one, or maybe two, offers. Home sales activity has slowed in response to rising rates and inflation, and market activity has cooled more quickly in the Washington DC metro area than in other Mid-Atlantic markets, as high home prices and over-the-top bidding wars have taken more prospective buyers out of the market. Sellers are responding by lowering prices to reflect the changing market conditions.

A growing number of sellers will have to drop their asking price to attract buyers. However, in most local markets, overall home prices won’t fall since supply is still very low and demand fundamentals are still strong. But bidding wars and offers tens of thousands of dollars above list price are largely in the rearview window, and home prices will increase year-over-year at a much slower pace.

Price Cuts in Local Markets: What share of sellers are dropping their price?

Washington DC Metro

Baltimore Metro

Philadephia Metro

To stay informed about housing market conditions, be sure to make use of Bright’s housing market reports and get a preview of future buyer activity by tracking the Bright MLS T3 Home Demand Index for the Philadelphia, Baltimore, and Washington DC regions.

 

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Dr. Lisa Sturtevant serves Bright MLS as the nation’s only MLS-focused economist. She leads research, reporting and insights from Bright’s comprehensive array of real estate data. In 2021, Bright’s over 100,000 subscribers facilitated $142B in real estate transactions through its system stretching across 6 states and the District of Columbia.