The vast majority of homeowners who decide to sell typically make out well. But in the second quarter, 3.5% of homes that sold in the D.C. region sold for less than the owner previously paid of it — up from 2.7% of sales at a loss a year earlier.
That is not necessarily a reflection of a weakening housing market. Sometimes owners have to sell, even when it means at a loss.
“There might be some people who have a better opportunity somewhere else, and they are willing to take a loss so they can pursue a job,” said Daryl Fairweather, chief economist at Redfin. “If they lost their job and need to move for a new job, that might be another reason. We are also seeing people who are forced to sell because of divorces or a death in the family.”
For sellers currently forced to sell, the most vulnerable to taking a loss may be those owners who only recently bought.
“People who maybe bought during the peak of the pandemic frenzy when there was so much competition. It was a wild time in the housing market, where people were potentially overbidding on homes and regret their decision,” Fairweather said.
The loss inflicted on sellers who only recently bought could also be exacerbated by extremely low down payments and no significant timeline to build equity.
The average loss among homes in the D.C. region that sold at a loss in the second quarter was $25,500
The vast majority of sellers profit, benefiting from the historic rise in home prices over the past three years. In the D.C. market, homes that sold last quarter sold at an average of 56.5% over their previous purchase price — or an average of $195,000.
During the last housing market crash, those forced to sell took significant losses — averaging 55% to 60% between 2009 and 2011.
Redfin’s report on second quarter sales shows the metro area with the largest share of sales at a loss was San Francisco, with 12.3% of homes selling below their previous purchase price.
Redfin’s full report on second-quarter homes that sold at a loss by metro area is can be found on the Redfin website.
