Homes are Continuously Selling for Less Than List Price: Key Market Insights and Trends

In a recent article by HousingWire, it was highlighted that nearly half of the homes sold in the current market appraised for more than the sale price. This statistic sheds light on the evolving dynamics of the housing market and underscores the unique opportunities and challenges facing both buyers and sellers. A report by Corporate Settlement Solutions (CSS) further emphasizes this trend, revealing that 51% of homes sold in the first half of 2024 appraised for more than their sale price, the highest percentage since the onset of the COVID-19 pandemic in March 2020. Despite this, only 8.4% of homes sold for more than their appraised value in 2024, pointing to complexities in deal negotiations and the challenges of accurate property valuations in a rapidly appreciating market.

Reflecting on our local market here in Southwest Colorado, the data from the first half of 2024 offers valuable insights. The average percentage of sold price to list price across various counties shows nuanced trends:

Overall, the combined average for all seven counties dropped from 98.3% in 2022 to 96.3% in 2024. In particular, Durango saw a decrease from 100.6% in 2022 to 98.1% in 2024, and Bayfield dropped from 100.9% in 2022 to 97.3% in 2024. This slight decrease from previous years in the sold price to list price indicates growing pressure on sellers to make deals with buyers.

The Buyer’s Advantage

For buyers, this trend is something to pay close attention to. With talks of potential rate cuts following the August Federal Open Market Committee (FOMC) meeting, this advantageous position may not last long. If interest rates fall, we could see a rebound in sales prices as buyer demand increases. Therefore, the current market conditions present a prime opportunity for buyers to negotiate favorable deals.

Pressure on Sellers

Sellers, on the other hand, are feeling the pressure to adjust their expectations. The lower sold price to list price ratio signifies that sellers are often negotiating down from their initial asking prices to close deals. This trend is a departure from the seller’s market conditions we saw in previous years, where homes frequently sold at or above the list price.

Potential Rate Cuts

The likelihood of a federal benchmark rate cut in September is high, and if this happens, it could lead to a decrease in the 30-year fixed interest rate. Lower interest rates typically spur more buyer activity, which could drive up sales prices and reduce the negotiating power of buyers. Therefore, if you're considering buying a home, acting sooner rather than later might be a wise decision.

The current real estate market in Southwest Colorado presents a unique landscape where buyers have a slight upper hand due to the pressure on sellers to close deals below market value. However, with the potential for interest rate cuts on the horizon, this window of opportunity may be short-lived. Stay informed, and make strategic decisions to capitalize on the current market conditions.

For further details on market trends and to explore opportunities in Southwest Colorado, feel free to contact me. Let’s navigate these changing times together and find the best deals tailored to your needs.

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