US housing market has flipped, and not in sellers' favor

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What goes around comes around, they say. When it comes to the housing market, however, the normal cyclical rotation has taken its sweet time arriving.

But now, a new analysis is calling it: The long American sellers’ market has ended.

“The bidding war era is over,” proclaims the report, published June 11 by Realtor.com. For too long, the authors write, sellers had a “free pass” on pricing their homes. But no longer.

“Today, an overpriced home doesn't just sit – it gets stale, loses leverage, and sells for less than it would have if it had been priced right from the start,” Joel Berner, a senior economist with the company, said in the report, which compared home sales data to Realtor.com listing histories.

“Price it right and buyers come to you,” Berner added. “Price it wrong and you're chasing them. Four weeks in, the market has already delivered its verdict – you've either got competing offers or you're about to cut your price."

In fact, home sales that close at the four week mark fetch 1.8% more relative to asking price than most homes did during the same period. After 18 weeks, those still on the market wind up selling for 1.3% less.

Even though housing is still unaffordable for far too many Americans, things are shifting, Berner wrote. “Buyers have more leverage than they’ve had in years, and that shows up clearly in the data.”

After the bidding-war insanity of the pandemic period, the current moment is “a real paradigm shift,” said Steve Reese, a real estate agent and owner of Sold on Shawnee in metropolitan Oklahoma City.

Homes that are presented well and priced right will sell, Reese told USA TODAY, and there are “still agents out there who do a very average job” even though now there are more options for buyers, and they are taking their time making the right decision, he says.

Notably, buyers in the $750,000-$2 million range might have the most leverage, the Realtor analysis finds. After seeing a greater number of bidding wars than average during 2022, the height of the pandemic rush, the final sales numbers for homes in those price points are the furthest below asking.

Another segment of the market that’s lagging behind: condominiums. While the average single-family home is selling for 99.2% of ask, condos are fetching 97.9% on average. Meanwhile, condo list prices are 6% lower than March 2022, even as single-family list prices are up 7.5% since then.

Condos have been hit hard by rising costs associated with ownership, such as HOA dues and homeowners insurance. After the deadly collapse of a condo building in Surfside, Florida, many buildings are shoring up their financial reserves and taking steps to guard against increasing risk, adding to common-charge assessments.

With all that in mind, "real estate is fiercely local," Reese said.