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Buyers gaining time and options as competition eases

Buyers gaining time and options as competition eases


Affordability challenges mount as market rebalancing accelerates, especially in expensive markets

  • Monthly payments on a typical mortgage are more than 75% higher than they were in June 2019.
  • Less-expensive metros are seeing the smallest declines in sales.
  • Typical U.S. rents have surpassed $2,000 a month for the first time, but growth is easing.

SEATTLE, July 19, 2022 /PRNewswire/ — Home shoppers are finding more options to choose from, more time to make decisions and even price cuts in some areas, according to Zillow’s® latest market report1. That’s largely because intensifying affordability challenges are thinning competition from a crowded field and giving newfound leverage to those who remain.  

“Those who can weather this storm of rising costs are having an otherwise less stressful buying experience compared to the pandemic-fueled rush on real estate in 2021. They have more options to tour, more time to find the right house, and are less likely to face a bidding war,” said Jeff Tucker, senior economist at Zillow. “But despite this initial move toward rebalancing, the market is still less buyer-friendly than the pre-pandemic norm in most of the country. Home seekers who are priced out today are eagerly anticipating drops in prices or mortgage rates so they can step back into the ring.” 

Home values recede in the most expensive metros
Annual home value appreciation eased for the third consecutive month in June, stepping down to 19.8% from a record high of 20.9% in April. But it still towers over the 4.6% year-over-year growth recorded in June 2019. The typical U.S. home value now stands at $354,165 and comes with a monthly mortgage payment that is more than 75% higher than in June 2019. 

Home values declined slightly from May to June in San Jose, Seattle, San Francisco and San Diego — all among the five most expensive metros — as well as in Austin, where home values have grown the most throughout the pandemic. Annual appreciation is still robust in these metros — from 15.4% in San Francisco to 25.2% in Austin. 

Less competition means more options and time to decide
Inventory has risen steadily over the past few months, bringing an annual deficit of 30.4% in January down to 9.1% in June. But the total pandemic hole is far from being filled. Inventory is still down 46% since June 2019. 

Extremely expensive metros and those with the largest run-up in prices over the course of the pandemic — San Francisco, Austin, Phoenix and Seattle — have inventory levels closest to where they were in 2019. This indicates competition in these areas is easing up more quickly than the national average. Median time on the market has ticked up, meaning buyers have slightly more time to shop, compare and evaluate options. Listings that go pending are typically doing so in seven days, which means competitively priced homes are still selling at a rapid clip. 

The share of homes with a price cut is rising across the U.S. as well, and at 14.8% is at the highest level since November 2019. Salt Lake City (24.1%), Sacramento (21.7%) and Phoenix (20.4%) are seeing the highest shares of price cuts.  

High costs driving sales pullback
A lack of affordable options is driving the slowdown. Of the 15 major metros that saw the largest month-over-month drops in listings that went under contract, 12 are among the nation’s 15 most expensive places to buy. The fastest drops in newly pending sales from May to June are taking place in San Jose (-24.3%), Seattle (-23.9%) and Salt Lake City (-20.8%). 

Conversely, of the 15 major metros with the smallest monthly pullback in sales, 10 are among the 15 least-expensive large cities. 

Rent growth eases 
Typical U.S. rents rose 0.8% from May and are now $2,007 per month, crossing the $2,000 threshold for the first time. Annual rent growth has eased steadily from a record-high 17.2% in February to 14.8% in June. Rents are up 24.6%, nearly $400 per month, since June 2019.

“A rapid run-up in rents that peaked in February was likely a one-time event, driven by a return to cities and people moving out of shared apartments or their parents’ house. We’re expecting rent growth to ease back down over the next several months as vacancy rates rise above historic lows,” said Tucker. “One factor that could slow the return to normal is the high cost of buying a home, which will encourage many renters to renew their lease instead.”

Metropolitan Area*

Zillow Home Value Index (ZHVI)

ZHVI Change Month over Month 

Monthly Mortgage Payment on a Typical Home**

Monthly Mortgage Payment Change Since 2019

Inventory Change Month over Month

Share of Listings with a Price Cut

Zillow Observed Rent Index (ZORI)

ZORI Increase Since June 2019

United States

$354,165

1.2 %

$1,613

75.7 %

10.3 %

14.8 %

$2,007

$396

New York, NY

$614,826

1.0 %

$2,800

55.5 %

5.3 %

11.0 %

$3,186

$443

Los Angeles, CA

$945,642

0.1 %

$4,306

74.0 %

10.3 %

13.5 %

$2,951

$504

Chicago, IL

$312,752

1.0 %

$1,424

57.0 %

7.6 %

16.7 %

$1,947

$224

Dallas–Fort Worth, TX

$397,605

2.0 %

$1,810

89.7 %

18.0 %

15.5 %

$1,825

$409

Philadelphia, PA

$336,380

1.1 %

$1,532

65.1 %

5.9 %

15.4 %

$1,852

$285

Houston, TX

$310,239

1.4 %

$1,413

72.7 %

7.5 %

16.8 %

$1,589

$223

Washington, DC

$556,296

0.4 %

$2,533

57.1 %

3.3 %

14.8 %

$2,263

$240

Miami–Fort Lauderdale, FL

$456,489

2.7 %

$2,079

86.1 %

9.3 %

12.5 %

$2,848

$939

Atlanta, GA

$381,361

1.4 %

$1,736

94.0 %

12.1 %

15.8 %

$1,946

$507

Boston, MA

$663,494

0.9 %

$3,021

65.1 %

6.4 %

11.2 %

$2,836

$288

San Francisco, CA

$1,492,535

-0.1 %

$6,796

63.0 %

10.2 %

12.5 %

$3,266

$155

Detroit, MI

$243,922

0.8 %

$1,111

66.3 %

12.2 %

14.3 %

$1,463

$295

Riverside, CA

$590,650

0.9 %

$2,689

90.2 %

11.6 %

17.9 %

$2,601

$743

Phoenix, AZ

$482,463

1.3 %

$2,197

115.4 %

15.1 %

20.4 %

$1,938

$604

Seattle, WA

$793,263

-0.2 %

$3,612

89.9 %

14.4 %

17.7 %

$2,307

$379

Minneapolis–St. Paul, MN

$379,145

0.5 %

$1,726

59.5 %

9.2 %

13.6 %

$1,657

$164

San Diego, CA

$931,006

-0.1 %

$4,239

92.1 %

14.2 %

17.0 %

$3,078

$765

St. Louis, MO

$243,935

0.6 %

$1,111

63.9 %

9.2 %

12.1 %

$1,290

$228

Tampa, FL

$382,776

2.2 %

$1,743

110.5 %

13.2 %

18.2 %

$2,106

$682

Baltimore, MD

$377,062

0.6 %

$1,717

54.5 %

4.8 %

14.5 %

$1,800

$272

Denver, CO

$646,474

0.2 %

$2,944

79.3 %

14.1 %

18.3 %

$2,005

$340

Pittsburgh, PA

$213,074

0.1 %

$970

62.2 %

5.7 %

17.3 %

$1,351

$193

Portland, OR

$588,722

0.2 %

$2,681

72.5 %

12.4 %

17.9 %

$1,915

$340

Charlotte, NC

$386,038

1.6 %

$1,758

99.8 %

13.7 %

16.4 %

$1,807

$433

Sacramento, CA

$626,326

0.7 %

$2,852

81.0 %

9.0 %

21.7 %

$2,292

$495

San Antonio, TX

$339,099

1.2 %

$1,544

78.1 %

11.9 %

15.8 %

$1,493

$295

Orlando, FL

$394,922

2.3 %

$1,798

90.9 %

13.6 %

14.7 %

$2,062

$557

Cincinnati, OH

$262,158

1.0 %

$1,194

73.0 %

8.4 %

13.5 %

$1,457

$298

Cleveland, OH

$219,635

1.2 %

$1,000

71.2 %

10.5 %

12.5 %

$1,384

$251

Kansas City, MO

$287,524

0.8 %

$1,309

71.3 %

14.1 %

11.1 %

$1,357

$260

Las Vegas, NV

$453,682

1.2 %

$2,066

88.5 %

22.2 %

20.3 %

$1,884

$535

Columbus, OH

$299,368

1.1 %

$1,363

72.8 %

10.9 %

11.9 %

$1,456

$293

Indianapolis, IN

$270,516

1.3 %

$1,232

80.9 %

13.9 %

13.8 %

$1,491

$336

San Jose, CA

$1,679,555

-0.8 %

$7,648

68.3 %

4.9 %

13.6 %

$3,361

$238

Austin, TX

$593,537

-0.5 %

$2,703

119.6 %

18.6 %

17.2 %

$1,895

$440

Virginia Beach, VA

$325,380

0.9 %

$1,482

62.3 %

5.0 %

10.8 %

$1,627

$333

Nashville, TN

$452,102

2.2 %

$2,059

95.4 %

20.4 %

17.7 %

$1,870

$432

Providence, RI

$449,970

1.3 %

$2,049

73.1 %

10.2 %

11.4 %

$1,953

$496

Milwaukee, WI

$272,038

0.5 %

$1,239

66.1 %

11.3 %

9.2 %

$1,202

$160

Jacksonville, FL

$370,983

2.0 %

$1,689

96.6 %

9.5 %

17.7 %

$1,783

$486

Memphis, TN

$230,764

1.1 %

$1,051

81.5 %

10.7 %

11.4 %

$1,516

$398

Oklahoma City, OK

$216,826

1.2 %

$987

69.6 %

10.7 %

14.1 %

$1,346

$232

Louisville, KY

$240,704

0.9 %

$1,096

65.1 %

8.6 %

16.2 %

$1,301

$228

Hartford, CT

$322,838

1.4 %

$1,470

65.2 %

6.8 %

10.5 %

$1,656

$297

Richmond, VA

$331,078

1.4 %

$1,508

63.0 %

3.0 %

10.0 %

$1,611

$323

New Orleans, LA

$269,203

1.1 %

$1,226

61.3 %

10.7 %

19.4 %

$1,538

$307

Buffalo, NY

$248,353

0.7 %

$1,131

74.8 %

16.1 %

10.5 %

$1,244

$228

Raleigh, NC

$462,839

1.8 %

$2,107

101.2 %

18.5 %

14.1 %

$1,769

$395

Birmingham, AL

$244,871

1.1 %

$1,115

73.4 %

8.4 %

12.6 %

$1,332

$241

Salt Lake City, UT

$613,471

0.3 %

$2,793

98.5 %

10.0 %

24.1 %

$1,703

$409

 

*Table ordered by market size 

**Includes principal and interest, assuming a 30-year fixed-rate mortgage with a 20% down payment and 5.52% interest rate on a home priced at the Zillow Home Value Index, or typical home value, for that area in June. Figures in the May monthly report included taxes and insurance.

1 The Zillow Real Estate Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research.

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life’s next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease. 

Zillow Group’s affiliates and subsidiaries include Zillow®,, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Trulia®, Out East®, ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

 

SOURCE Zillow





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