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Coronavirus, Home Values

Six Cities COVID-19 is Making More Affordable to Buy a Home

From Los Angeles to Miami, the COVID-19 pandemic has seen home prices in major cities decrease over the course of the past couple of months. These are the cities that have seen homes become more affordable in light of the virus.

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When the coronavirus pandemic shut down most states in March, no one knew quite what the impact would be on home sales. The pandemic struck just as the annual spring selling season opened. Suddenly selling and buying houses became extremely complicated. Buyers had to make offers without home inspections. Instead, they had to settle for “virtual walkthroughs.” Contracts contained “coronavirus clauses,” which give buyers the right to cancel for any problem related to the pandemic. Closings required “e-notaries,” and sometimes they took place in parking lots where the buyer, seller, and attorney stayed in their cars.

Read: The Future of Homebuying: Questions to Ask in a Post-COVID-19 World

It was no surprise that home sales in April plunged nearly 18% from March, the most significant month-over-month drop in ten years. When sellers stopped filing new listings during the opening of the spring season, concerns began to grow that demand would also evaporate, and home prices would be the next metric to tumble.

Surprisingly, demand didn’t dry up at all. Buyers, especially first-time buyers, stuck around. Prices stabilized and even appreciated a little. After a week or two passed, some sellers who were desperate to sell listed their houses at prices lower than they were a month earlier. In some markets, these discounts created unexpected opportunities for buyers, especially first-time borrowers and investors, to find bargains.

Read: How COVID-19 Changed 2020 Market Predictions

Weiss Analytics found that as many as one out of four new listings in some markets were discounted by 2% to 11% below market prices. As weeks passed, new listings improved, but discounting continued. According to their analysis, homes priced higher than $600,000 were more likely to be cut than the less expensive homes. Homes that are priced at $200,000 or less have fewer discounted listings, about 30%, while the median discount is lower, at 6.3%.

Here are six markets where discounting has revived demand.

Los Angeles, California

One of the hottest markets in the country, the median home price for a single-family home in Los Angeles County, hit $650,000 in January, an 8.5% increase from the year before. But from March to April, prices fell 1.1% – a 3.3% decline over the previous year – but sales plummeted 21.2%, dropping by one-fifth when the pandemic hit. In April, Los Angeles County, the median home price rose 3.8% to $630,000, while sales dropped 35.2%. Supplies of new listings fell 63% between mid-March to the end of May and about one-third of new listings during those ten weeks were discounted.

los angeles california

Chicago, Illinois

After the pandemic hit Chicago and the state of Illinois shut down, the inventory of homes for sale in Chicago dropped by 18.2% in April as sellers stopped listing their homes. Demand began to revive before new listings recovered, pushing up prices 6.7% over April 2019. From the beginning of the pandemic to the middle of May, 33% of new listings have been discounted by an average of 26%.

Sacramento, California

Sacramento, California experienced less discounting than other California markets. Sales dropped 32% between mid-March and May, yet only 13% of its new listings were discounted during that period. The average discount was only 1%.  Prices dropped 3.6% year-over-year, and sales were down 31% from April 2019, putting pressure on sellers to lower prices.

Austin, Texas

The city of Austin, Texas has been another one of the hottest markets in the nation over the past few years, and its housing market reacted very differently to the pandemic than less prosperous cities. Austin suffered no drop at all in its April new listings — which was a significant vote of confidence by its sellers. Only 8% of its new listings in April and one percent in May were discounted, but the average discount was relatively high, at 35%. There aren’t many bargains in Austin, but if you find one, it should be a good one.

austin texas

Read: Millennials in the Market: Texas Edition

Pittsburgh, Pennsylvania

Pittsburgh has been one of the more prominent turn-around markets recently, and it is often listed as an attractive market for first-time buyers. Its supply of new listings fell by 75% when the pandemic hit but rebounded in May when seller confidence returned. New listings rose 134% above April levels.  In April, 27% of its listings were discounted, which fell to 24% in May.  The average discount is 24%.

Miami, Florida

Sales of both condos and single-family homes dropped nearly 40% in Miami-Dade and Broward from the same month in 2019. Single-family homes sales fell 31.6%, and condo sales dropped 47.9%. Yet prices continued to rise, echoing the pattern of falling sales and increasing prices in other major metros. The plunge in sales ignites a decline in new listings of 55% from mid-March to April and 99% from April to May. Only sellers who had to sell were doing so, and by mid-May, 27% of new listings had been discounted below pre-pandemic prices.

miami florida

Find Discounts on Homes.com

The tools and architecture of Homes.com’s site make it easy to find discounted new listings as soon as they are posted on multiple listing sites. For buyers looking for discounts, speed is critical. Though sales and new listings fell with the arrival of the pandemic, homes are selling like hotcakes, especially the affordable homes sought by investors and first-time buyers.

  1. Find your favorite neighborhood, and new listings will pop up at the top of your screen. Check out how long each of then has been listed on Homes.com. You will probably find that new listings have a short shelf life these days. Check the history of each home’s price history to get a feeling for its last valuation.
  2. Then go to Homes.com’s Home Values Calculator and find each home valuation. Remember, these are calculated based on sales of local, comparable homes that can be as six months old. In these times of crisis, a house sold six months ago would be worth 2% to 3% more in the average market today.
  3. Return to the listings of the home you are investigating. Are there any clues that the seller is under pressure to sell quickly? Are the rooms in the interior photographs empty of furniture, or does it look as though the family is still living there? In the outside shots, is there a car in the driveway? If it is springtime, are the trees full of leaves? The answers to these questions may reveal that the seller is in a hurry to sell.
  4. Book tours of the best prospects as soon as you can. If you have found a bargain, you will have to move quickly to beat the competition.
  5. If you don’t score on right away, be sure you are signed up to get alerts from Homes.com for each new listing.

Discounting will decline as markets settle down but stay attuned to employment trends locally. If the tough times predicted by many economists to be on the way, more bargain-priced homes will be listed in the neighborhoods you are tracking.

New listings with discounted prices, 2/15/20-5/31/20

CBSA Metros Percent of new listings discounted since 2/15/20 Price change since 2/23/20 Amount of discount Median Price

5/23/20

MOM Price change

5/31/20

El Paso, TX 59% -2.22% -9% $ 214,400.00 2%
San Antonio-New Braunfels, TX 57% -2.26% -9% $ 254,977.25 0%
Killeen-Temple, TX 54% -2.06% -10% $ 225,062.50 0%
Wichita, KS 48% 0.33% -9% $ 177,844.00 2%
New Haven-Milford, CT 41% 3.75% -9% $ 211,850.00 1%
Albany-Schenectady-Troy, NY 39% 4.24% -9% $ 242,100.00 -1%
Akron, OH 38% 3.72% -10% $ 183,699.88 0%
Davenport-Moline-Rock Island, IA-IL 38% 4.93% -8% $ 181,525.00 1%
St. Louis, MO-IL 37% 4.48% -9% $ 228,887.50 1%
Portland-South Portland, ME 36% 6.21% -12% $ 243,725.00 -1%
New York-Newark-Jersey City, NY-NJ-PA 36% 5.73% -12% $ 466,375.00 0%
Jackson, MS 35% 4.95% -9% $ 245,587.50 2%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 33% 6.14% -9% $ 278,700.00 1%
Peoria, IL 33% 8.44% -13% $ 232,100.00 3%
Buffalo-Cheektowaga-Niagara Falls, NY 32% 5.96% -10% $ 229,637.50 1%
Bridgeport-Stamford-Norwalk, CT 31% 8.23% -13% $ 172,749.88 1%
Toledo, OH 31% 7.15% -9% $ 242,175.00 0%
Baltimore-Columbia-Towson, MD 28% 6.44% -10% $ 324,375.00 0%
Pittsburgh, PA 28% 10.79% -17% $ 169,812.50 3%
Fayetteville, NC 26% 7.02% -9% $ 237,312.50 1%
New Orleans-Metairie, LA 26% 14.62% -11% $ 209,331.25 2%
Worcester, MA-CT 26% 8.83% -10% $ 180,550.00 1%
Birmingham-Hoover, AL 25% 9.20% -11% $ 239,975.00 1%
Cleveland-Elyria, OH 25% 10.68% -10% $ 177,350.00 1%
Detroit-Warren-Dearborn, MI 25% 9.58% -9% $ 232,937.50 0%
Dayton, OH 21% 11.70% -10% $ 169,975.00 2%
Asheville, NC 18% 15.48% -9% $ 230,937.50 4%

Source: Weiss Analytics

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Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

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