‘We’re seeing buyers backing’: This dramatic chart shows the housing market’s turn as sellers slash home prices

This compares with just 4% of homes falling in value each week compared to the same period a year ago.

Redfin’s data goes back to 2015. The company averaged the market share of discounted listings over four weeks, to flatten out any outliers.

Taylor Marr, deputy chief economist at Redfin, added that looking at a larger period of time, i.e. a month, the company’s data shows that a quarter of homes are now falling in value.

“We have never been this high,” Marr told MarketWatch in an interview.

Unlike buyers, who are much more sensitive to rising mortgage rates, “sellers are just slow to react to changes in demand … they set prices based on the position of the market. [and] Marr is often reluctant to bid too low.

So for sellers, prices are a bit more expensive, he added, and fall more slowly.

But even if it took a while, it finally happened.

After all, mortgage rates are at their highest levels in decades, with a 30-year trend steadily above 7% as of Friday afternoon, according to Mortgage News Daily. And that number is likely to rise even higher, as the 10-year Treasury bill
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is trending above 4%.

Meanwhile, Redfin said the median home price on the market is listed at more than $367,000, up 7% from last year.

A monthly mortgage on that home with a current interest rate of 6.92%, according to Freddie Macis $2,559.

A year ago, when interest was at 3.05%, that monthly payment would have been just $1,698.

Two tips for homebuyers struggling with high mortgage rates

Sellers are offering discounts of 4 to 5 percent on average, Marr said.

“You would almost expect it to be a lot worse,” he added, given how quickly rates rise and erode purchasing power.

But buyers and sellers are also using two different tactics to lower mortgage rates, Marr said.

One, sellers are approaching buyers and offering concessions to lower mortgage rates.

In other words, the seller is asking the buyer to pay the entire asking price, but is offering to use part of that as a concession to get the buyer a lower interest rate on their mortgage.

“It’s basically a drop in price,” says Marr, “it’s the same…but it doesn’t necessarily show up in the data.” And it’s hard to understand how important this is going on, he added.

Marr explains: If a buyer puts down $100,000 for a 20% down payment on their home at 6.5% interest, they can allocate 10% on the down payment and spend the rest of the 50,000 dollars to buy. reduce the mortgage rate to 5%.

“5% isn’t too bad and it seems like a lot of money, but… you will most likely be encouraged to refinance [in the future] and you will have to pay the closing costs of that loan to refinance, which can be up to 15k,” added Marr.

Buyers are also turning to adjustable-rate mortgages, which have lower interest rates at the start of the term. ARM is nearly 12% of all mortgage applications, The Mortgage Bankers Association noted on Wednesday the level is high.

Where prices are falling

As for where prices are falling, several places stand out with Redfin.

They say home prices are down 3% year-over-year in Oakland, California, and 2% in San Francisco. New Orleans also fell 2%.

“Even in Atlanta, or Orlando, we see buyers turning down,” Marr commented.

So with sellers finally dropping the list price, if you’re a buyer right now, don’t be alarmed by the rising rate and stop looking, he advises.

“There have been opportunities where rates have really dropped and given buyers time to go back and get some good deals on their already discounted homes,” he said.

Plus, “there’s no harm in making a low-ball offer,” added Marr. “Some sellers are desperate and that could be a good strategy… we have heard from some of our own agents that some buyers are getting incredible deals right now.”

But if you need to rent for a year and wait for things to settle down, then do it, says Marr, and accumulate those savings for that dream home.

Are you thinking about the housing market? Write to MarketWatch reporter Aarthi Swaminathan at [email protected]