It is no secret at this point that one of the economic effects of the COVID-19 pandemic has been a red-hot housing market. With more people at home, consumer spending in 2020 was down and savings rates were up, while the government pumped money into the economy with low interest rates and direct stimulus to American households. These conditions gave more people the means to save up for a home and brought a stampede of new would-be buyers into the housing market. But with many sellers staying out of the market, prices are at record highs and inventories at record lows.
While COVID-19 has created conditions for dramatically accelerated demand for homes over the last year, the reality is that these trends have been ongoing for several years. One key factor is demographics: the Millennial generation is now in their late 20s and 30s, and as they settle into their careers and family life, more have been entering the housing market. According to the National Association of Realtors, Millennials represented 38% of homebuyers last year, and a large share of those were first-time buyers.
The increased demand has translated to rapidly increasing rates of homeownership and decreasing rates of homeowner vacancy. Just five years ago in 2016, homeownership rates were at 63.4%—their lowest level since the 1990s, according to U.S. Census data. In 2020 that figure was 66.6%, which was a 2 percentage point increase just over the previous year. Vacancy rates, meanwhile, have taken the opposite trajectory. After spiking to nearly 3% when the housing bubble burst in the mid-2000s, vacancy rates have declined sharply and dipped to a low of 1% in 2020.
With higher demand and lower inventory, prices inevitably start to rise. The trend of price increases extends to homes of all sizes. Based on Zillow data dating back to 1996, prices for 1, 2, 3, 4, and 5+ bedroom homes have all been creeping steadily upwards since around 2012, when the recovery from the last recession began to pick up steam. Within the last year, the trend lines in each category have moved more steeply upward, an indication that record low inventory is pushing up prices for all home types.
While home pricing is usually cyclical—with higher prices and fewer cuts during spring and summer months—2020 and 2021 have proven to be aberrations. The share of listings with price cuts stayed relatively flat throughout 2020, between 11% and 13%, before turning sharply downward at the end of the year. In February 2021, the share of listings with a price cut was at 8.2%, a decrease of more than half from a recent peak of 17.8% in September 2019.
This is not the reality in every market, however. Some cities where housing is plentiful and easy to build—like Houston—or where demand is lower—Rust Belt metros like Pittsburgh and Dayton—are still seeing substantial price cuts after homes come on the market. In contrast, cuts are almost nonexistent in some other areas where the inverse is true.
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To find these locations, our team of researchers used data from Zillow to identify the share of listings with a price cut, the median price cut as a percentage of list price, the median price cut in dollars, and the median home value in all metro areas with available data. These figures all come from data collected from September 2020 through February 2021 to reflect the latest market trends.
Here are the metropolitan areas with the most and fewest homes selling below asking price.
Large metros with the most homes selling below asking price
1. Chicago, IL
- Share of listings with a price cut: 17.9%
- Median price cut as a percentage of list price: 2.4%
- Median price cut in dollars: $7,350
- Median home value: $257,400
2. Louisville-Jefferson County, KY
- Share of listings with a price cut: 16.9%
- Median price cut as a percentage of list price: 2.7%
- Median price cut in dollars: $5,322
- Median home value: $195,880
3. Indianapolis, IN
- Share of listings with a price cut: 16.8%
- Median price cut as a percentage of list price: 2.5%
- Median price cut in dollars: $5,475
- Median home value: $199,721
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4. Pittsburgh, PA
- Share of listings with a price cut: 16.4%
- Median price cut as a percentage of list price: 3.3%
- Median price cut in dollars: $6,344
- Median home value: $175,315
5. Houston, TX
- Share of listings with a price cut: 16.3%
- Median price cut as a percentage of list price: 2.3%
- Median price cut in dollars: $7,810
- Median home value: $229,957
6. Dayton, OH
- Share of listings with a price cut: 16.1%
- Median price cut as a percentage of list price: 2.9%
- Median price cut in dollars: $5,006
- Median home value: $149,572
7. Oklahoma City, OK
- Share of listings with a price cut: 15.5%
- Median price cut as a percentage of list price: 2.0%
- Median price cut in dollars: $5,000
- Median home value: $168,394
8. Charleston, SC
- Share of listings with a price cut: 15.3%
- Median price cut as a percentage of list price: 1.9%
- Median price cut in dollars: $6,733
- Median home value: $292,942
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9. Albuquerque, NM
- Share of listings with a price cut: 15.3%
- Median price cut as a percentage of list price: 2.2%
- Median price cut in dollars: $6,083
- Median home value: $234,844
10. Columbus, OH
- Share of listings with a price cut: 15.3%
- Median price cut as a percentage of list price: 2.4%
- Median price cut in dollars: $5,625
- Median home value: $230,663
Large metros with the fewest homes selling below asking price
1. El Paso, TX
- Share of listings with a price cut: 6.0%
- Median price cut as a percentage of list price: 2.3%
- Median price cut in dollars: $5,006
- Median home value: $147,524
2. Stockton, CA
- Share of listings with a price cut: 7.2%
- Median price cut as a percentage of list price: 2.4%
- Median price cut in dollars: $10,072
- Median home value: $423,916
3. Urban Honolulu, HI
- Share of listings with a price cut: 7.4%
- Median price cut as a percentage of list price: 3.0%
- Median price cut in dollars: $14,186
- Median home value: $739,690
4. Boise City, ID
- Share of listings with a price cut: 7.5%
- Median price cut as a percentage of list price: 2.1%
- Median price cut in dollars: $8,908
- Median home value: $381,759
5. Ogden, UT
- Share of listings with a price cut: 7.9%
- Median price cut as a percentage of list price: 2.3%
- Median price cut in dollars: $9,994
- Median home value: $371,978
6. Providence, RI
- Share of listings with a price cut: 8.2%
- Median price cut as a percentage of list price: 3.1%
- Median price cut in dollars: $10,000
- Median home value: $350,548
7. Madison, WI
- Share of listings with a price cut: 8.2%
- Median price cut as a percentage of list price: 2.8%
- Median price cut in dollars: $10,000
- Median home value: $305,550
8. Colorado Springs, CO
- Share of listings with a price cut: 8.6%
- Median price cut as a percentage of list price: 2.3%
- Median price cut in dollars: $10,567
- Median home value: $359,246
9. Riverside, CA
- Share of listings with a price cut: 8.6%
- Median price cut as a percentage of list price: 2.5%
- Median price cut in dollars: $10,228
- Median home value: $425,713
10. Virginia Beach, VA
- Share of listings with a price cut: 8.7%
- Median price cut as a percentage of list price: 2.1%
- Median price cut in dollars: $5,211
- Median home value: $261,139
Detailed findings & methodology
The data used in this analysis is from Zillow. Researchers calculated the share of listings with a price cut, the median price cut as a percentage of list price, the median price cut in dollars, and the median home value. All were obtained using data from September 2020 through February 2021. The analysis includes all homes, including single-family, condominium, and co-operative homes with a county record. Metropolitan areas were ranked based on the share of listings with a price cut. In the event of a tie, the location with the higher median price cut percentage was ranked higher. Only the largest metropolitan areas in the U.S. with available data from Zillow were included.
