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Seattle’s real estate market has dealt with a uniquely potent cocktail of sales declines, price cuts and longer wait times as homes sit on the market. By Redfin’s account, it’s the fastest-slowing major housing market in the U.S.
But Seattle is just one of six cities in West Coast states that round out Redfin’s Top 10 list of fastest-slowing markets, according to a report the real estate company’s research team released Wednesday.
“These are all places where homebuyers are feeling the sting of rising home prices, higher mortgage rates and inflation very sharply,” Redfin Chief Economist Daryl Fairweather said in the report. “They’re slowing down partly because so many people have been priced out and partly because last year’s record-low rates made them unsustainably hot.”
The California cities of San Jose, San Diego, Sacramento and Oakland were each among the 10 fastest-slowing markets. Redfin arrived at this list using a combination of metrics to find where price cuts have been on the rise, sales have been down and homes have been selling at a slower pace, among other factors.
Tacoma, Washington, joined its northern neighbor Seattle on the list as well.
The remaining markets that have seen the biggest slowdowns consist of places to which people migrated to during the pandemic, Redfin said. This process may have contributed to especially fast home-price appreciation in recent years that is now slowing — or reversing altogether.
In Seattle, only about two-thirds as many homes sold within two weeks in August as did at the same time last year. As recently as February, that number was actually higher year over year, marking a significant half-year slowdown in the pace of the market.
The price per square foot of a typical home in Seattle — up 23 percent year over year in February — has dropped to a mere 5 percent. And home prices in recent weeks were falling: 2 percent lower in August than they were in July.
The second-fastest-slowing market on Redfin’s list was Las Vegas, one of the bigger migration destinations throughout much of the pandemic.
In Las Vegas, home prices dropped by 3 percent from July to August alone. And only about three-quarters as many Vegas-area homes sold within two weeks as did during the same period last year, Redfin’s data shows.
Redfin real estate agent Tzahi Arbeli said the conditions have turned in his Las Vegas buyers’ favor.
“Not only have prices fallen in recent months, but sellers see the market cooling and they’re more open to negotiating prices, giving concessions and paying closing costs,” Arbeli said in the report. “They may accept an offer that’s $20,000 below asking price and pay for repairs the buyer found during an inspection. Sellers can still get a fair price–but it’s with the understanding that they may have to wait several weeks for the right offer, and buyers are no longer willing to overpay.”
The noted migration destinations of Phoenix and Denver have also seen some of the fastest housing slowdowns in the country, according to the report.
While these local markets may be cooling faster than most, the U.S. is undergoing a sharp reduction in home demand that has already had a prolonged effect on price growth. And as mortgage rates remain roughly double where they were when they kicked the housing market into a frenzy over the past few years, forecasters continue to adjust their expectations for the next 12 months downward.
“The good news,” Fairweather said in the report, “is that the slowdown is dampening competition and giving those who can still afford to buy more negotiating power.”