According to a new report, home sellers are slashing prices to attract buyers deterred by high interest rates.
Zillow reports about 23 percent of homes listed nationwide have dropped, which is abnormally high. That has been attributed to high interest rates, which remain above seven percent, resulting in mortgage payments being about $1,000 more per month than pre-pandemic levels.
The drop in home prices could also be due to the fact that new home sales have dropped 16 percent over the last two months and five percent from last November.
Home prices in New Orleans, parts of Florida, Memphis, and Chicago have dropped by at least 2% and by as much as 5%. Meanwhile, in Milwaukee, San Diego, and Providence, Rhode Island, home prices have increased by at least 7.5%.
The rise in interest rates was used to tame inflation and avoid a recession, which has largely worked as the unemployment rate has remained below 4% after hitting a high of 13% in 2020. As inflation cools, interest rates have flattened to 3.2% since July.
Additional decreases in home prices could lead to a boom in home sales, which is still the most tried and true way of building wealth in America.
Home buyers and sellers experienced a boom during the beginning days of the COVID-19 pandemic as millions of Americans used the rise of remote work to leave metro areas and get more space or move from rural areas to big cities with more entertainment options. However, according to a Home Bay survey, 75% of Americans who relocated during the pandemic regret doing so.
The two biggest regrets among those who relocated during the pandemic are people wishing they’d moved to a bigger home and those missing their old home. Additionally, 40% of respondents said they cried at least once during the moving process.
