Home prices are beginning to drop within certain areas of the country, particularly in parts of Utah and other mid-sized metros in the West, according to a new report from Redfin.
Many of these metros with the biggest share of price drops were migration hotspots and had outsized price growth during the pandemic.
Nearly half, or 47.8%, of homes for sale in Provo, Utah — located about 45 miles from Salt Lake City — had a price drop in May, the highest share of the 108 metro divisions in this analysis. Tacoma, Wash., had about the same share of price cuts, at 47.7%. Denver is also up there, experiencing price drops in 46.9% of homes for sale, followed by Salt Lake City (45.8%), and Sacramento (44.3%). Boise, Idaho (44.2%), Ogden, Utah (42.6%), Portland, Ore. (42%), Indianapolis (41.9%), and Philadelphia (41.2%) round out the top 10.
Provo, Boise, Salt Lake City, Sacramento, and Ogden were the top five metros with the biggest increase in the share of listings with price drops from a year earlier. Roughly 12% of listings in Provo and Boise had a price drop in May 2021, and it was around 20% in Salt Lake City, Sacramento, and Ogden.
Overall, about half of the metros in this analysis saw more than 25% of home sellers drop their asking price in May. Additionally, more than 10% of home sellers dropped their price in all 108 metros, driving the national share of price drops to a record high.
In Provo, home prices shot up 65.7% to $550,000 from May 2020 to May 2022. They rose 56.2% to 4556,000 in Salt Lake City, 66.7% in Boise to $550,000, and 57.2% to $500,000 in Ogden.
Dramatic increases in home prices were largely due to out-of-town homebuyers moving in during the pandemic, competing with locals for a limited supply of homes. Migration into both Boise and Salt Lake City metro areas, including Provo and Ogden, nearly tripled throughout 2020. The trend has started to reverse in both places, with Salt Lake City seeing a net outflow for the first time on record in the first quarter.
“Many buyers are backing out of the market — and even backing out of deals — and some sellers are responding by dropping their price,” said Boise Redfin agent Shauna Pendleton. “Some buyers are no longer able to afford the home they want because mortgage rates have increased so much. There aren’t nearly as many people moving into the Boise area now that prices have gone through the roof.
"Ironically," Pendleton added, "a lot of Boise newcomers are now leaving because the quiet, slow-paced lifestyle that drew them here doesn’t exist the way it did before so many people moved in. Those people are cashing in on their equity to move to more affordable areas, mainly in the Midwest, where they can get more for their money — in some cases, they can even pay all cash.”
Although the share of homes with a price drop increased year-over-year in 102 of the 108 metros in this analysis, it declined in six metros: McAllen, Texas; Elgin, Ill., Chicago; Fresno, Calif.; Lake County, Ill.; and Springfield, Mass.
