from CoreLogic
— this post authored by SHU CHEN
Ten years after the financial crisis, the national CoreLogic Home Price Index (HPI®) has exceeded its pre-crisis peak and continues to grow but at a slower pace than in recent years. With home prices reaching many buyers’ budget limits, the share of homes selling at or above list price has returned to normal levels.
Figure 1 shows the share of homes that sold at a price above, equal to or below the list price. [1] The share of homes selling at or above list price has returned to early 2000 levels. In Q2 2018 that share peaked at 43% of total sales – almost triple the level during the trough in January 2008. As annual home price growth started to slow in Q3 2018, the share of homebuyers able to negotiate a better price began to rise. As of June 2019, the share of homes that were sold at or above list price has fallen to 39.2% – still 10 percent point higher than the average since 2000.
Housing markets are different across the nation and sales and listing patterns vary geographically. Figure 2 shows the share of homes that sold at, above, or below their list prices in 20 metropolitan areas during June 2019. San Francisco had the largest share of homes – 83% – that sold for at least the list price. Seattle and Minneapolis followed with 74% and 62% selling for the list price or more, respectively. Miami had the lowest share – 19% – of homes selling at or above the list price in June. Supply levels play a part in the final sales price. San Francisco’s 1.7 months of supply in June 2019 was among the lowest in the nation and about half of the national level of 3.3 months. At the other extreme, Miami had 7.7 months of supply this June.
Price pressures rapidly increase as supply drops below 3 months. Figure 3 shows the price premium or discount and months’ supply for over 200 metropolitan areas in June 2019. In San Francisco, where the supply has been thin, homebuyers had to pay 11% more than the asking price on average. On the other hand, in a market like Miami, where the months’ supply was relatively high, homebuyers were able to negotiate below asking prices, with average discounts of 6.6% this June.
Note: The U.S. statistics are based on data for 51 metropolitan areas. Each of these metros has at least 50% coverage since 2000. CoreLogic MLS data coverage usually increases over time, which might also contribute to inventory increases.
Footnotes
[1] Figures 1 and 2 use 51 metropolitan areas to aggregate national-level statistics. The inventory has not been adjusted for growth in the number of households over time. As the number of households increases over time, the ‘equivalent’ level of inventory should rise as well.© 2019 CoreLogic, Inc. All rights reserved.
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