The power is shifting toward buyers in California markets – but high prices still make it difficult to afford a home
SEATTLE, March 7, 2019 /PRNewswire/ — Limited inventory and rapid price appreciation have kept sellers firmly in the driver’s seat for several years as the United States recovered from the housing market collapse. Now, buyers are gaining more negotiating power as the housing market slows, especially in some of the nation’s hottest markets.
In 20 of the 35 largest metros, market conditions favor buyers more than they did a year ago, according to the Zillow® Buyer-Seller Index. The index is based on the share of listings with a price cut, how long it takes to sell a home, and the sale-to-list price ratio. By comparing each metro across time, this analysis shows whether the market is cooler (favoring buyers) or hotter (favoring sellers) than it was in the past.
California markets have seen the biggest shift toward buyers since last January, led by San Jose, which has seen the most significant swing. San Francisco, San Diego, Los Angeles and Denver round out the top five markets where buyers will have an easier time navigating the market than they would have in recent years.
Even though San Jose and San Francisco have cooled exceptionally, they are still the hottest markets compared with others around the country, markets where listings see few price cuts, homes don’t stay on the market for long, and sale-to-list price ratios are higher. In these two Bay Area markets, home prices are so prohibitive, the typical buyer must put more than a 20 percent down to keep mortgage payments at or below 30% of monthly household income.
San Jose buyers would need a 49 percent down payment, or $614,100, nearly three times as much as the national median home value. Buyers in San Francisco (43 percent), Los Angeles (43 percent) and San Diego (31 percent) would also need to put down more than 20 percent.
“It is no surprise that the markets which pushed the bounds of affordability over the housing recovery are now experiencing significant cooling,” said Skylar Olsen, Zillow Director of Economic Research. “As down payments and mortgage payments far outpaced incomes, buyer demand eventually exhausted itself. Those buyers looking in cooling markets will likely welcome the relief, although the entry price is still high. Inventory is returning and spending more time on market, meaning their decision making can be made with a cooler head.”
While some of the hottest markets slowed down over the past year, others have become more seller-friendly. Miami – which tends to see large fluctuations – has seen the biggest overall shift toward favoring sellers over the past year, with homes selling about a week faster than they did a year ago.
Markets That Have Cooled (Ranked in Order of Biggest Cooldown)
San Jose, CA
San Francisco, CA
San Diego, CA
Los Angeles-Long Beach-Anaheim, CA
Dallas-Fort Worth, TX
Las Vegas, NV
San Antonio, TX
Kansas City, MO
Markets That Have Heated Up (Ranked in Order of Biggest Increase)
Days on Market
Miami-Fort Lauderdale, FL
St. Louis, MO
New York, NY
Minneapolis-St Paul, MN
Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists, data analysts, applied scientists and engineers produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
For further information: Lauren Braun, Zillow, email@example.com