Housing market is showing signs of cracking: 'Anything-goes list-price strategy is no longer working'
Sales of both existing and newly built homes fell in June, the latter to the lowest level since last year. Prices continue to rise, but the gains are slowing. Mortgage applications to purchase both new and existing homes have been falling steadily, and mortgage rates are rising again. Single-family home construction also fell and was lower than June 2017.
In one of the nation’s hottest metropolitan markets, Denver, Colorado, home sales fell 5.5 percent annually in June, even as prices hit an all-time high, according to a report by RE/MAX. Realtors there blame it squarely on a lack of homes for sale.
“Year-over-year prices have been climbing for more than two years now, which is great news for homeowners and sellers,” said RE/MAX CEO Adam Contos. “The slower sales figures we’re seeing are tied to inventory more than anything else.”
But the slowdown is also tied to overheated prices. Even in the hottest markets, there is a limit to affordability, and that limit is clearly now being hit.
In pricey Southern California, sales of both new and existing homes fell sharply in June compared with a year ago, according to CoreLogic. Demand is still quite strong, and while prices continue to gain, more listings are showing price reductions.
“The market is strong, but I’m seeing a noticeable difference in the number of buyers that are looking at my listings each week,” said David Fogg, a real estate agent based in Burbank, California. “We’re still selling most every home, but now it is usually with just one or two offers over the 10 to 15 offers we were seeing earlier in the year.”
‘Anything-goes list-price strategy’
Fogg said he is also working very closely with his sellers now to make better and more realistic decisions about pricing.
“The anything-goes list-price strategy is no longer working. Buyers want to buy, but we’re seeing fewer of them, and they are much more careful. Many properties are now not selling and/or coming down in price.”