Redfin Reports Prices Begin to Fall from Record Highs

The median sale price for U.S. homes came down 0.7% from its record-breaking June peak during the four weeks ending July 10, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Sellers’ asking prices also came down 3% from their May peak as the share of homes with price drops hit another new high. Home supply posted its first year-over-year increase since August 2019 as pending sales continued to slide. These changes in the housing market can be attributed to buyers reaching their limit on costs—not just of homes and mortgages, but also food, transportation and energy.

“Inflation and high mortgage rates are taking a bite out of homebuyer budgets,” said Redfin Chief Economist Daryl Fairweather. “Few people are able to afford homes costing 50% more than just two years ago in some areas, so homes are beginning to pile up on the market. As a result, prices are starting to come down from their all-time highs. We expect this environment of reduced competition and declining home prices to continue for at least the next several months.”

Some markets that are not nuts will take a 5-10% haircut, 99.5% of new home buyers will be slow to buy at 5%-7% rates, but nesting with custom kitchens and school districts being important with 30-40 year old wives is a strong instinct.

The markets that were up 75% - 250% over the past 5 years will just plain have no buyers until that 2.5 million dollar listing sells for 750k and the seller are ready to take a loss because cash is king as another asset is more attractive.

A 3 million - 1 million dollar home is a specialized listing to very few zip codes and less than 200,000 buyers per year. Just about every one of those buyers already has a loan at 3% for a 1 million - 500k house they wanted/refied just 18 months ago. Nobody needs a 2.5 million dollar house and certainly none are starter home.

The rest of the must buyers will be looking at a lower teir of home unless prices return to 2017-2018 numbers. 350k - 150k there is a ton of housing that provides a roof and school district. The local tax burden is insane even at that strata but it manageable in most zip codes. Even at 7% rates, one has to consider that there are great deals and rates will at least go back to 5% sometime in any 3-5 year business cycle. That would make the discount needing to be 6% - 12% on average for 350k - 150k houses. In my sedate maket those houses are up 20%-40%. Motivated Buyers and sellers can find a equilibrium point quickly at the low end. There will be some McMansion Zip codes that will take half a decade to recover to having sales even at 2018 prices at 5% rates.

I remember housing prices in the 70’s with similar inflation to what we’re having now.

The real price of building a home never went back to what it was before 1976 anymore than the price of a bottle of coke went back to 5 cents a can.. Ford’s ‘whip inflation now’ didn’t work on housing.

You’re factoring in interest rates but not costs of labor and building supplies changing... permanently

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