Home shoppers in major cities are finding some of the largest discounts in recent years, with the most significant price cuts in metros like Pittsburgh, New Orleans and Austin, Texas, according to Zillow.
In a new report released Monday, the online real estate marketplace said typical discounts added up to $25,000 in October, "matching the biggest discounts Zillow has tracked." The report states that home sellers are often dropping prices multiple times before a sale.
As housing inventory continues to grow, driving more price cuts, there is "a sliver of an opening" for prospective buyers who are finally seeing improved conditions in some major U.S. cities, the report says.
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Mortgage rates in the low-6% range are making costs slightly more manageable compared to the past two fall seasons. Zillow suggests that "patient" shoppers can potentially find a good deal on a home purchase when sellers cut prices on homes that have lingered on the market.
The smallest median home price discounts are mainly found in more affordable metros with a solid pace of home sales. Oklahoma City (-$15,000), Louisville, Kentucky (-$15,000) and St. Louis (-$15,100) topped that list. But where are the largest price cuts?
10 metros where sellers are offering huge home price cuts
Of the 50 largest metro statistical areas, or MSAs, these are the cities with the largest median price cuts in October, according to Zillow:
- San Jose, California: -$70,900
- Los Angeles: -$61,000
- San Francisco: -$59,001
- New York: -$50,000
- San Diego: -$50,000
- Boston: -$49,900
- Seattle: -$41,000
- Austin, Texas: -$36,000
- Portland, Oregon: -$31,901
- Sacramento, California: -$30,900
It's not surprising that many of the most expensive markets are at the top of this list. In San Jose, which ranks first, the typical sale price is over $1.3 million, which is nearly four times the typical U.S. home price, according to Zillow data. By nature, home price cuts will often be larger in such an expensive city.
In more affordable housing markets, "smaller cuts can represent a bigger relative discount for buyers," Zillow explains in the report. For example, the median price cut of $70,900 in San Jose is only around 5% of the typical home value.
In other words, when you consider the context of home prices, those pricey West Coast and Northeast markets no longer dominate the list.
Relative to home values, these are the five markets with the largest discounts in October:
- Pittsburgh (about -9% of the typical home value)
- New Orleans (-9%)
- Austin, Texas (-8.4%)
- Houston (-8.2%)
- San Antonio (-7.9%)
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