Understanding Price Fluctuations and Buyer Behavior in Today’s Real Estate Market



The housing market in the U.S. continues to experience notable shifts as we head into the final months of 2024. One of the most striking developments in recent weeks is the drop in the median listing price of homes while the price per square foot rises. This paradox may seem puzzling, but it speaks to broader changes in buyer preferences, housing supply, and market dynamics.


The Drop in Median List Price


In September 2024, the national median list price of homes fell by approximately $5,000, from $429,990 in August to $425,000. This drop aligns with the typical seasonal cooling in the housing market as summer ends, but it also represents a more significant shift compared to the same time last year. With interest rates remaining high, many potential buyers have found themselves priced out of the market, leading to a softening in demand, especially for larger and more expensive properties.


As a result, sellers have been increasingly willing to adjust their prices. In September, 18.6% of homes listed for sale saw price reductions, slightly higher than the 17.7% recorded in September 2023. In fact, in regions like the West and Midwest, the share of homes with price cuts grew by over 1%. For prospective buyers, this is welcome news, as it signals that there may be opportunities to find deals, particularly in markets where homes have remained on the market longer.


The Rise in Price Per Square Foot


At the same time, the price per square foot has continued to increase. In September 2024, the average price per square foot was 2.3% higher than it was at the same time last year. This rise can be attributed to a shift in the types of homes that are being listed and sold. Smaller homes, which have become more popular as buyers try to balance affordability with quality, command a higher price per square foot. This is particularly true in high-demand areas where land and space are at a premium, and buyers are willing to pay more for less overall square footage if it means access to desirable locations or high-quality amenities.


This divergence—where overall prices are falling, but price per square foot is rising—suggests a changing buyer profile. Many buyers today are willing to compromise on the size of their homes, opting for more compact living spaces that fit within their financial constraints. At the same time, they are willing to pay more per square foot for features like updated finishes, energy-efficient appliances, or proximity to urban centers.


What This Means for Buyers and Sellers


For buyers, understanding this shift in the market is crucial. While it may seem like the overall price of homes is declining, it’s important to recognize that smaller, more desirable properties may still be quite competitive. Buyers should approach their home search with a clear sense of what they value most—whether it’s space, location, or amenities—and be prepared to act quickly when they find a property that fits their needs and budget.


For sellers, this market presents both challenges and opportunities. Those with larger properties may need to adjust their expectations, particularly if their homes have been on the market for an extended period. However, sellers with smaller, updated homes in desirable locations may find themselves in a stronger negotiating position, as these properties continue to attract premium prices per square foot.


In Summary


The fluctuations in the real estate market in late 2024 highlight the importance of staying informed about both broader trends and local market dynamics, especially here, in and around Tacoma. While the median price of homes may be falling, the rise in price per square foot signals that the demand for quality, location, and amenities remains strong. For both buyers and sellers, understanding these trends will be key to navigating a market that continues to evolve.


As always, if I can help you buy or list a home in Tacoma or anywhere in the Puget Sound, please text or call me at (206) 643-8845 or connect with me at www.erikmolzen@bhhsnw.com


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Location: Tacoma, WA, USA

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