The familiar drumbeat of late in the U.S. housing market is the combination of rising prices and scarcer inventory, indicating a harsh market. But a new report from Trulia has found that sellers and landlords have spent the past year cutting prices and rents, leading the company to speculate that some markets could be softening.
Over the past year, Trulia found that 70 of the 100 largest metros saw a half-percent increase in the share of for-sale listings with a price reduction. San Francisco came on top with a 3.07 percent increase in price reductions, though San Francisco remains a hot market. Only 8 percent of listings saw a price reduction this year, the second lowest out of the top 100 metros.
Nationally, rental listing prices increased by 1.35 percent to 9.32 percent overall from the year prior. And 80 of the top 100 metro areas saw more rental prices drop from last year to this year. Texas was the most notable area for reductions. Dallas led the list with a 10.74 percent shift. And, returning to San Francisco, landlords offering a month free rent is a growing practice.
According to Trulia, most months in 2016 showed a higher proportion of for-sale listings with price reductions compared to months exactly one year ago. Trulia emphasized that it is not saying that home prices have been declining‒‒in fact, the median for-sale listing prices increased almost 7 percent from last year to this year. Rather, the company suggests the market could be softening a bit.
Mark Uh, a researcher for Trulia who wrote the report, said the reason for the softening could be that landlords and sellers listed their properties too high the first time around.
“Perhaps it’s taking property owners a bit longer to sell or rent than you thought,” Uh wrote. “One solution may be to list the property a smidge lower (albeit still at a higher price than what you would have listed your house for the same time around last year) in order to attract more potential buyers or potential tenants. Such eye-blinking behavior or lesser degree of confidence is captured by the increase in the share of listings that saw a price reduction.”