Home prices roared higher for the two years after the start of the COVID-19 pandemic. Mortgage rates were below 3% for most of that time. People moved from large coastal cities to smaller inland ones by the hundreds of thousands. Now, mortgage rates at 7% have begun to slow purchases and lower inventory.
The housing markets in some metro areas have become troubled enough that people can get the kinds of price deals not available until very recently. Instead of a frenzy of offers, in several cities, people have started to bid well below listed prices. According to a recent study, Rocky Mount, North Carolina, is at the top of this list.
In Realtor.com’s Beat Sticker Shock: The 10 Cities Where Buyers Have the Best Chance of Negotiating Home Prices Way Down report, George Ratiu, a senior economist and manager of economic research at Realtor.com, pointed out, “Yes, they are emerging markets with promising economies. Yes, they are popular for newcomers. But are they possibly overpriced, given local earnings? It seems so.”
The markets on the list of 10 cities are those where demand has dropped considerably over the past few months.
Rocky Mount has a median home price of $275,000, well below the national figure. One theory about the ability to offer below the asking price for homes in this metro is that prices surged until recently. This may be because it has been an attractive suburb for people who work in nearby Raleigh.
East Stroudsburg, Pennsylvania, was second on the list. It has a median home price of $345,000, which also is well below the national figure. The theory behind the sharp drop in prices in the metro is that it is only a little more than an hour from New York City. But prices have risen fast enough so that people who used to find prices affordable do not anymore.
The cities on the list share two things in common. They are close to large metro areas and they became extremely attractive because they had relatively low median home prices two years ago. As people relocated to smaller cities, prices rose sharply and have become too expensive to be considered by people looking for a medium-sized city where they can afford a home.
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