How are rising mortgage rates impacting home sales? Comparing the percentage of sellers who dropped their price in April 2022 vs. April 2021 finds an increase in Fla. metros.
SEATTLE – Price drops are increasingly common, particularly in hot migration destinations, according to a new report from Redfin.
In Florida, the study found that one out of three Cape Coral sellers dropped their price this April compared to only 18.5% in April of 2021. Of the 11 Florida cities included in the study, Cape Coral topped the list for Florida. Miami came in last with 9.2% of sellers dropping their price compared to a similar percentage, 8.9%, in April 2021.
Florida: Percent of price drops, April 2022 vs. April 2021
- Cape Coral – 32.5% in 2022 compared to 18.5% in 2021, year-to-year price increase of 63.8%
- North Port – 29.6% compared to 23.8%, price increase of 53.8%
- Tampa – 27.8% compared to 22.2%, price increase of 48.6%
- Orlando – 24.4% compared to 23.3%, price increase of 41.8%
- Lakeland– 23.6% compared to 19.9%, price increase of 49.4%
- Jacksonville – 20.3% compared to 11.5%, price increase of 41.7%
- Deltona – 17.3% compared to 13.6%, price increase of 48.4%
- West Palm Beach – 14.6% compared to 12.9%, price increase of 47.5%
- Fort Lauderdale – 11.1% compared to 10.9%, price increase of 29.3%
- Palm Bay – 10.1% compared to 7.6%, price increase of 42.9%
- Miami – 9.2% compared to 8.9%, price increase of 43.9%
In Boise, Idaho, 41% of home sellers dropped their price in April, the largest share among the 108 metropolitan divisions included in Redfin’s analysis. That’s up from 10% a year ago. Cape Coral, FL (33%), New Orleans (32%), Baton Rouge, LA (31%) and Sacramento (30%) rounded out the top five markets driving the national rate increase of price drops to its highest level since October 2019.
“Many places like Boise or Sacramento that saw a surge in migration and a sharp increase in home prices over the past two years have now seen an abrupt drop-off in demand, leading sellers to drop their prices with increasing frequency,” says Redfin Chief Economist Daryl Fairweather. “When mortgage rates were at or below 3%, both local and out-of-town homebuyers were more willing and able to tolerate high prices; but at 5%, many are now priced out.”
More than 20% of home sellers dropped their price in April in seven of the 10 most popular April migration destinations (Cape Coral, Sacramento; North Port, Tampa; Atlanta, San Antonio and Phoenix).
“Conversations with prospective sellers are longer and more emotional now than they were just a few months ago,” says Boise Redfin real estate agent Shauna Pendleton. “If your home has been listed for several days with little or no interest from buyers, it’s time to consider dropping the price. If you do have to drop the price, you are far better off doing one large price drop instead of a series of smaller price drops. A larger number of drops is often interpreted as desperation and encourages buyers to wait even longer or make a lower offer.”
In six metro areas, the share of homes with a price drop decreased significantly (5 percentage points or more) from a year ago. All six had a median sale price in April below the national median of $424,400.
The full report of seller price drops by metro area is posted online.
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