All sorts of problems
We’ve written recently about data showing the low inventory problem of the housing market.
One would think that a lower supply in a market naturally leads to higher prices, right?
What the numbers say
However, according to Trulia’s most recent research, price cuts continue to increase across both the buyer’s market and the renter’s market. Specifically, the numbers of listings that cut rent increased to 9.7 percent this year, up from 8.6 percent last year. For-sale listings that cut prices increased to 10.9 percent from 10.4 percent last year.
These trends are even more pronounced in larger metropolitan markets.
With 83 of the top 100 largest metro areas saw rent cuts increase, while 69 large metro areas saw price cuts on for-sale listings.
What could this mean?
According to the Trulia report, “if price cuts are predictive, home prices could soon flatten. On the other hand, accelerating home prices could make it more difficult for sellers to price their home right out of the gate.”
The same could logically be assumed for rent prices
If price cuts continue to increase, especially after five years of steep increases, rents could hit a stabilization point.
Texas metro areas seem to be hit the hardest by these cuts; Dallas saw a 6.5 percent increase in rent cuts, the most on the list, followed by Austin (4.8%), and Houston (4.2%). Florida also dominates this top ten list; both Jacksonville and West Palm Beach saw 3.5 percent increases in rent cuts. At tenth on the list, Miami saw rent cuts increase by 3.2 percent
In the for-sale market, the story remains the same.
Dallas saw the largest increase in for-sale price cuts, followed by San Antonio.
Austin and Fort Worth were seventh and tenth, respectively. While Florida is nowhere to be found in the top ten, the Bay Area takes their share. San Jose saw the third-most price cuts, followed by San Francisco in fifth and Oakland in ninth place.
Cuts in the Texas market can largely be attributed to strong population growth. The job economy continues to boom in the state, and lots of folk (especially of a younger demographic) are moving to cities like Austin, Dallas, Houston, Fort Worth and San Antonio in order to take advantage. According to Census data from last year, “Four Texas metro areas together added more people last year than any state in the country except for Texas as a whole.”
Additionally, according to the Trulia report, “Texas is the largest non-disclosure state in the country. Having less information about how much other homes are selling for makes it more difficult to price your own home.”