Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.
The home price indexing, analytics, and forecasting firm says its data show that about one-fourth of listings since the COVID-19 outbreak began in those markets were priced at discounts from pre-pandemic prices, and that the percentage goes up for higher-priced homes.
"After 97 straight months of year-over-year gains, first-time buyers and investors have a reprieve, at least temporarily, from monthly price inflation that has made it hard to save for down payments or find profitable rentals," Weiss Analytics said in a news release.
The higher they are, the faster they fall
The company said its research found that 37% of homes recently listed for more than $600,000 were being offered at a median discount of 7.7% from their February values. New listings for such homes have outpaced sales by 3 to 1, the company said, and the discount has increased every week since March.
The Weiss Analytics report said homes priced at less than $200,000, by contrast, have been discounted about 30% of the time and at a median of 6.3%. Tighter supply also is buoying that market tier, with listings only exceeding ratings by a ratio of 1.5 to 1.
The percentage of new listings discounted vary widely by market. The highest were New York at 34% discounted since February, followed by Baltimore and Los Angeles at 31% and 30%, respectively, Weiss Analytics said. The highest discounts were in Pittsburgh (20%) as well as Baltimore and San Antonio, at 10% each.
Facing important uncertainties
"These higher discounts for more expensive homes, and current relative strength for lower-priced houses, is significant," said Allan Weiss, CEO of Weiss Analytics and co-founder of Case Shiller Weiss. "The implosion of the non-QM mortgage market is contributing to softer demand and more discounting by sellers at these higher price levels."
And while lower-priced homes would seem to be a sweet spot for buyers as their personal economies recover, much depends on the job market bouncing back as cities and states strive to get back to a new normal. (The New York Times reported Wednesday, May 20, that all 50 states have begun reopening.)
"The future value of entry-level homes faces important uncertainties, particularly whether reopening communities can be sustained so we have an employment recovery," Weiss said.
"To some degree, it's a win-win for would-be entry-level buyers if prices become more realistic, people maintain their incomes and they can borrow to purchase," he added.
Got $1,000? The 10 Top Investments We’d Make Right Now
Our team of analysts agrees. These 10 real estate plays are the best ways to invest in real estate right now. By signing up to be a member of Real Estate Winners, you’ll get access to our 10 best ideas and new investment ideas every month.
Find out how you can get started with Real Estate Winners by clicking here.