As a result of higher mortgage rates and a slowing economy, expect to see some areas of the housing market cool more than others, according to one expert.
In the really overpriced markets like West Palm Beach, Austin, Tampa and Tampa, you're starting to see a lot of price reductions, said Ralph DiBugnara, president of Home Qualified. A lot of those areas were very, very overpriced. According to Redfin, the areas that saw the biggest price increases during the epidemic are now seeing a large number of price drops.
Provo Utah — about 45 miles outside of Salt Lake City — saw 47.8% of its sellers cut their list prices in May.
More than 40% of listings saw price drops in May, as well as Denver, Colo. Sacramento, Calif. and Boise, Idaho.
Phoenix, Ariz. and Orlando, Fla. are just a few of the more than 100 metro areas studied by Redfin in which at least 25% of sellers reduced asking prices in May.
Reductions are a result of Bidding wars and over-asking offers during the Pandemic.
DiBugnara said that most of the houses are overpriced because of the prices.
He said that you should be more conscious of buying something. I believe that 2021 was a big inflated year. I think that a lot of these markets you're going to see prices go back where they were in the 2020 range. The luxury market is experiencing the initial impact of high mortgage rates, and the smallest pool of buyers is experiencing the first hit.
DiBugnara said the luxury market is taking the first hit. You can see the houses being reduced first if you reduce them over $700,000, over a million, over 2 million, depending on where the market is. Then the other markets will follow. Demand for vacation properties is impacted as demand falls below pre-pandemic levels. There are increasing concerns that there will be a recession, which is expected to continue as a result of the waning appetite for second homes.
The travel will be affected, said DiBugnara. Second homes will be affected and vacation homes will be affected. I think you'll see more of that stuff coming on the market now, whereas you couldn't get any of those properties during the Pandemic, and now there's going to be inventory for those properties. I have about 15 short term rental properties in five states. Most of them are booked through the summer. Unlike people who are booking way ahead into September, October, and even the holidays, those bookings have not been coming the same way they were coming over the last two years, said DiBugnara.