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Buyers gaining time and options as housing marketplace rebalances

Competition is easing as inventory accumulates, leading the marketplace back toward ‘normal’

  • U.S. home values fell 0.1% from June to July, the initial decline in the raw Zillow Home Value Index since 2012. Home values fell last month in 30 of the 50 largest metro areas, but remain up 16% from the year ago.
  • Rising inventory has been driven by homes lingering available and new listings trailing pre-pandemic levels. It took 10 days for an inventory to go pending in July, two days longer than in June.
  • Rent appreciation is slowing, however the growth rate remains higher than pre-pandemic levels.

, /PRNewswire/ — After 2 yrs of unprecedented growth, home values fell slightly from June to July, based on the latest market report1from Zillow. The marketplace is quickly rebalancing. With buyers’ purchasing power diminished by nearly 2 yrs of double-digit price growth and higher mortgage rates, competition for homes is dropping off.

Zillow logo (PRNewsfoto/Zillow Group)

The normal U.S. home value declined by 0.1% ($366) month over month in July and today stands at $357,107, as measured by the raw2 Zillow Home Value Index (ZHVI). Monthly growth in this metric has relaxed since reaching a recently available peak of just one 1.9% in April, slowing to at least one 1.2% growth in-may and 0.8% growth in June. It isn’t unusual for home price growth to decelerate this time around of year, however the small decline may be the first monthly dip since 2012. The country’s typical home value is up 16% year over year and 44.5% since July 2019.

“Home values flattening so quickly after recent record growth might surprise, but it is a badly needed rebalancing that provides home buyers more options, additional time to shop and much more negotiating power,” said Zillow chief economist Skylar Olsen. “This slowdown is approximately discouraged buyers pulling back following the affordability shock from higher rates. As prices soften, many will renew their interest, and we’ll continue our progress back again to ‘normal.’ With buyers ready in the wings once confidence returns, homeowners can get to keep a lot of the equity gains they’ve observed in the last 2 yrs.”

Home values measured by raw ZHVI fell from June to July in 30 of the 50 largest metro areas, a rise from 13 the prior month. The biggest monthly home value declines were in San Jose (-4.5%) and SAN FRANCISCO BAY AREA (-2.8%) the country’s priciest major markets accompanied by Phoenix (-2.8%) and Austin (-2.7%), which saw probably the most extreme growth on the pandemic. Values rose probably the most since June in Miami (1.5%), Richmond (1%) and Memphis (0.9%), although monthly growth has decelerated in these markets.

Home shoppers still on the hunt have significantly more time and energy to find and consider their options, and also have a better potential for seeing price cuts. Listings’ median days to pending jumped by two days in July to 10 still nearly fourteen days significantly less than in July 2019. Among major metros, typical time on market is rising fastest in Austin, Phoenix and San Jose. A broad swath of sellers are adjusting pricing to meet up buyers’ expectations, because the share of listings with a cost cut grew to 18.6% in July, several percentage points greater than in July 2019.

Homes lingering available are driving for-sale inventory up at an easy clip. Inventory is up 5.1% monthly, yet new inventory fell 13.6% month over month in July. In comparison to July 2019, 15.5% fewer new listings came available. This new inventory figure will not include new construction, so that it represents current homeowners deciding never to list their homes.

While total inventory is rising quickly, it still stands 43.5% below July 2019. Low inventory is really a key reason Zillow economists usually do not expect home prices to fall significantly.

“Inventory, the pool of homes available throughout a given window, is quite attentive to easing demand and slowing sales, this season posting the biggest month-over-month seasonal increases for just about any May, June or July ever recorded,” said Olsen. “The flow of homes in to the market, however, is slowing. High interest levels tend keeping current homeowners from deciding to list, because they compare their current rate and home against so what can be found available, keeping inventory far below pre-pandemic norms regardless of the slowdown in sales.”

Typical monthly rent in the U.S. is currently $2,031. Following a rapid run-up that peaked in February, rent hikes seem to be stabilizing, easing to 0.6% month-over-month growth in July after seeing higher volatility through a lot of 2021. Although growth is decelerating, the annual growth rate continues to be more than 3 x that of July 2019.

Among major metros, the most important slowdowns in monthly rent growth since July of this past year occurred in NEVADA (from 3.6% to -0.2%), Phoenix (3.5% to -0.3%), Tampa (3.9% to 0.3%), and Austin (3.8% to 0.7%).

Metropolitan Area*

July Zillow Home Value Index (ZHVI) (Raw)

July ZHVI Month-over- Month (MoM) Change (Raw)

ZHVI Cumulative Change since July 2019 (Raw)

Share of Listings with a cost Cut

ZIllow Observed Rent Index (ZORI)

Zillow Observed Rent Index MoM Change

USA

$357,107

-0.1%

44.5%

18.6%

$2,031

0.6%

NY, NY

$621,308

0.3%

28.9%

12.8%

$3,246

1.2%

LA, CA

$929,753

-0.4%

41.0%

17.8%

$2,964

0.5%

Chicago, IL

$314,179

-0.3%

29.0%

20.4%

$1,932

0.7%

DallasFort Worth, TX

$396,904

-1.1%

55.4%

22.0%

$1,834

0.6%

Philadelphia, PA

$339,731

0.2%

36.2%

18.1%

$1,844

0.7%

Houston, TX

$313,999

0.1%

42.3%

20.9%

$1,602

0.2%

Washington, DC

$554,381

-0.5%

28.3%

18.8%

$2,278

0.7%

MiamiFort Lauderdale, FL

$476,138

1.5%

58.2%

16.0%

$2,841

0.4%

Atlanta, GA

$383,509

-0.3%

58.7%

20.3%

$1,980

0.8%

Boston, MA

$660,230

-0.7%

34.9%

14.7%

$2,834

1.0%

SAN FRANCISCO BAY AREA, CA

$1,436,044

-2.8%

29.3%

17.5%

$3,277

0.5%

Detroit, MI

$242,273

-1.2%

34.4%

18.4%

$1,467

0.5%

Riverside, CA

$580,593

-2.4%

53.2%

23.0%

$2,612

0.5%

Phoenix, AZ

$470,800

-2.8%

69.5%

28.8%

$1,921

-0.3%

Seattle, WA

$779,350

-0.3%

52.2%

25.6%

$2,346

0.5%

MinneapolisSt. Paul, MN

$375,933

-1.0%

29.1%

17.6%

$1,651

-0.1%

NORTH PARK, CA

$894,246

-2.5%

50.0%

23.6%

$3,126

1.2%

St. Louis, MO

$244,022

-0.5%

34.3%

15.5%

$1,308

0.4%

Tampa, FL

$389,519

0.6%

74.3%

24.7%

$2,118

0.3%

Baltimore, MD

$378,970

0.1%

27.1%

17.9%

$1,811

-0.1%

Denver, CO

$630,141

-1.8%

43.5%

26.3%

$2,021

0.0%

Pittsburgh, PA

$211,239

-0.7%

31.4%

20.0%

$1,349

0.4%

Portland, OR

$573,768

-1.7%

37.7%

23.5%

$1,941

0.4%

Charlotte, NC

$390,944

0.3%

64.8%

21.3%

$1,815

0.8%

Sacramento, CA

$611,287

-2.5%

45.4%

27.5%

$2,309

0.5%

San Antonio, TX

$340,131

-0.5%

45.9%

20.9%

$1,512

0.8%

Orlando, FL

$403,394

0.5%

59.1%

20.0%

$2,063

0.3%

Cincinnati, OH

$262,353

-0.6%

40.9%

17.4%

$1,436

1.3%

Cleveland, OH

$221,357

0.0%

40.6%

16.1%

$1,361

-0.7%

Kansas City, MO

$288,359

-0.2%

40.1%

15.3%

$1,383

1.0%

NEVADA, NV

$450,931

-1.4%

54.8%

28.6%

$1,877

-0.2%

Columbus, OH

$303,834

0.6%

43.4%

16.6%

$1,493

1.2%

Indianapolis, IN

$272,815

0.0%

48.8%

18.4%

$1,510

0.9%

San Jose, CA

$1,559,455

-4.5%

29.2%

19.5%

$3,369

1.0%

Austin, TX

$566,533

-2.7%

70.4%

25.2%

$1,929

0.7%

Virginia Beach, VA

$331,311

0.8%

34.8%

14.1%

$1,641

0.8%

Nashville, TN

$460,734

0.1%

62.2%

23.5%

$1,888

0.3%

Providence, RI

$452,906

-0.7%

42.2%

15.3%

$1,966

-0.7%

Milwaukee, WI

$271,982

-0.2%

35.3%

10.2%

$1,241

1.1%

Jacksonville, FL

$379,196

0.5%

63.7%

23.9%

$1,784

0.5%

Memphis, TN

$235,511

0.9%

51.0%

14.4%

$1,530

-0.4%

Oklahoma City, OK

$220,029

0.5%

39.5%

18.0%

$1,343

0.5%

Louisville, KY

$242,542

0.0%

35.6%

19.6%

$1,311

1.2%

Hartford, CT

$324,265

-0.4%

36.4%

13.6%

$1,680

0.9%

Richmond, VA

$338,875

1.0%

35.4%

13.7%

$1,631

1.1%

New Orleans, LA

$272,694

0.1%

33.8%

23.0%

$1,531

0.1%

Buffalo, NY

$249,777

0.3%

43.5%

13.2%

$1,266

1.1%

Raleigh, NC

$457,006

-2.5%

62.3%

19.7%

$1,786

0.8%

Birmingham, AL

$246,532

-0.1%

41.0%

16.2%

$1,369

0.7%

Salt Lake City, UT

$595,794

-1.2%

56.0%

32.5%

$1,702

-0.2%



*

Table ordered by market size



1

The Zillow MARKET Report is really a monthly summary of the national and local areas. The reports are published by Zillow Research. To learn more, visit www.zillow.com/research.



2

Home value figures in the July 2022 Zillow market report represent the raw version of the Zillow Home Value Index. All previous Zillow market reports purchased the smoothed and seasonally adjusted version of the Zillow Home Value Index. The smoothed and seasonally adjusted version smooths home value changes on the trailing 90 days, which ultimately shows a cleaner trend line minus the month-to-month spikes of the raw series. Zillow Research has chosen to provide the raw version during this time period of unparalleled volatility. For reference, the smoothed and seasonally adjusted version of ZHVI shows a 0.7% month-over-month gain in July. The entire group of all ZHVI versions, including geographic decreases to the ZIP code level, are around for download at https://www.zillow.com/research/data/.

AboutZillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining property to create it simpler to unlock life’s next chapter. As the utmost visited property website in america, Zillow and its own 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 MORTGAGE LOANS, Zillow Closing Services, Trulia, Out East, ShowingTime, Bridge Interactive, dotloop, StreetEasy and HotPads. Zillow MORTGAGE LOANS, LLC can be an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

SOURCE Zillow

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