A map of the U.S. with the Bay Area, California; Cedar Rapids, Iowa; and Roanoke, Virginia highlighted.
Illustration by Lanette Behiry/Real Estate News

Market Moods: Price cuts are rare when a home is priced right 

It might seem like sellers are slashing prices, desperate for a sale. But while price cuts are up, agents say they're still the exception.

March 17, 2023
5 minutes

Key points:

  • Price cuts were up nearly 174% in January compared to a year prior, but the overall percentage is still in the single digits.
  • Agents in Virginia, Iowa and California are seeing moderate to strong sales activity in their markets.
  • When a home is prepped and priced well, it can still sell quickly — sometimes over list.

Editor's note: Numbers don't lie, but they don't always tell the whole truth. Market Moods looks at data from the perspective of agents across the U.S. — the people who know what's really going on at the local level.

If you look at the price cut data, the U.S. housing market might seem to be in a free fall. After all, price cuts have more than doubled since this time last year. But a closer read tells a less dramatic story.

In a Market Pulse report earlier this month, HouseCanary noted that price cuts were up a whopping 173.6% this January compared to January 2022, before the housing market hit the brakes. That might seem like a big jump, but it's actually a 62.5% drop from price-cut peaks in September and October of 2022, and overall levels of price cuts remain in the single digits.

According to Redfin, over the past month, an average of 4.9% of homes for sale each week had a price drop, up from 2% a year earlier. But 24% of the homes sold during that period still sold above list price, down from 45% a year earlier. 

That's a lot of numbers. But what it all adds up to is a market that's stabilizing, according to several agents around the country.

'The frenzy is back' in Virginia

"If it's in good condition and a desirable location, we're still getting [homes] that are going well above list price," says Dayna Patrick with RE/MAX All Stars in Roanoke, Virginia. "Because we still have very low inventory, there's still a lot of pressure on price."

Patrick says multiple offers are back. "Not necessarily with the price increases the way they were a year ago," she says. "But the frenzy is back as of probably mid-February."

And buyers expecting a bargain are in for a surprise. "It helps to show them the recent activity," she says. "Buyers are having to lose out on a couple of properties and eventually they realize where the market's at."

Her pricing advice for sellers depends on their motivation. "If they're looking for a fast sale … underpricing is the best strategy."

But even without underpricing, houses in good shape will move. "If people overpriced their listing to start with it may linger." she says. "But for the most part there's a lot of demand."

Calming conditions in Cedar Rapids

"We're just not listing them as crazy high as we were," says Debra Callahan with RE/MAX Concepts in Cedar Rapids, Iowa. "We've adjusted our prices when listing based on interest rates."

When price cuts do happen, it's "usually because agents aren't pricing them according to inventory and current conditions." She likes to make price cuts quickly. "If you have six showings and you don't have an offer, that's a really good indication that you're not priced right."

That's not something most sellers want to hear, she acknowledges. "Usually they want to wait 30 days." she says. "But by then your house is stale and people think, 'What's wrong with it?'"

It's also hard for some sellers to accept that the market has shifted. "But it's very rare that you get to sell in a sellers market and buy in a buyers market," she reminds them.

Most of Callahan's sellers now are in a must-sell position. "That's the big difference. They're selling because they have a job change or their employer is forcing them back into the office."

Bay Area sees a mixed bag

"It's a little bit of everything" says Adam Hamalian with the Dudum Real Estate Group in Contra Costa County. He cites lack of inventory, higher interest rates and the chaos of layoffs in the region's tech industry as competing forces on the market. "It's kind of some whitewater."

Still, homes that look good and are well-prepared to greet potential buyers "can get multiple offers over list," he says. On the flip side, "if a house is challenged, not move-in ready, or has an unusual floor plan, those properties are getting below ask. A year ago, they would also have gone over."

Current listings "are almost all due to death and divorce," Hamalian says, but he sees a "normal amount of listings in the pipeline for spring."

"I think we're going to have the most typical market that we've had since pre-pandemic. ... The total number of transactions will go down but the prices won't go crazy."

In nearby Fremont, Calif., Bryan Van Heusen with Legacy Real Estate says prices softened through January but have since taken off again.

Most price adjustments are from houses originally listed in November and December of last year, he said. "I had some listings in December we couldn't pay people to come in to see. But we took them off the market, put them back up in January and had multiple offers."

A downward price adjustment on those homes has a tremendous impact. "As soon as they make a price adjustment, everybody swarms to it and it drives the price back up."

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