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Lower mortgage rates bring monthly costs down, but the housing market is still reeling from affordability problems

  • The share of homes sold above list price fell to 28%, the lowest rate since June 2020.
  • Monthly mortgage costs have fallen more than $100 from peak as rates have relaxed, but are still nearly double what they were in 2019.
  • It takes about 30 days to sell a home, compared to six in April 2022 and 43 in 2019.

SEATTLE, Jan. 19, 2023 /PRNewswire/ — The housing market continued its return back to earth in December as affordability challenges kept demand in check, the latest Zillow® data shows. Falling mortgage rates lowered costs slightly, and a number of key indicators inched closer to seasonal norms during what is typically the slowest time of year.

Buyers should appreciate that list prices are once again roughly indicative of the sale price and even slightly aspirational on the part of sellers. Just over a quarter (28%) of homes nationwide sold above their first list price in November (the most recent data). 

That’s the lowest portion since June 2020, when the housing market was just getting over the initial shock of COVID-19 and starting to heat up, but it’s still higher than the 21% sold above list price in November 2019. Metros with the highest share of homes selling above list price are relatively affordable: Buffalo (63%), Hartford (57%) and Milwaukee (48%). 

“The housing market ended 2022 in a deep freeze, but there are some green shoots pushing up,” said Jeff Tucker, senior economist at Zillow. “The recent thaw in mortgage rates has begun to attract some renewed interest from buyers, and home sales are climbing again compared to last year. If rates continue to march down this spring and sellers return in seasonal force, the housing market just might get to have a normal — maybe even boring — year.”

Typical time on market — how long a listing waits before going pending — is now up to 30 days. It’s a far less frenzied environment than last December’s 13 days till pending and the low of just six days that was seen in the past two springs, but still considerably faster than the 43 days to pending before the pandemic, in December 2019. 

Homes in Western metros that were white hot in 2021 are now taking the longest to sell: 68 days in Austin, 57 days in Las Vegas and 55 days in Phoenix. Meanwhile, the fastest-moving markets are more affordable; Hartford, Cincinnati, Kansas City and Columbus all saw median listings go pending in two weeks or less. 

Monthly mortgage costs are now just under $1,800 for a typically valued home after a 20% down payment, a decline of more than $100 from the peak in October. But payments are still 62% higher than last December and are $875 higher than in December 2019. These affordability challenges are dragging demand down from the lofty heights seen earlier in the pandemic. Sales in November measured by Zillow’s nowcast were down 33% year over year and 16% compared to 2019. 

Total inventory is declining roughly in line with pre-pandemic seasonal norms and is gaining ground over last year, rising from a 26% annual deficit in January 2022 to now standing at 16% above the previous year.

But the recovery of inventory is being driven by falling sales, not the addition of new listings. Still high yet falling mortgage rates may be convincing current homeowners to hold on to their property until the spring selling season. December is usually the slowest time of year for sellers to list, but new additions in December were significantly lower than in 2019, and new for-sale listing levels have lost ground to the previous year for eight consecutive months.

Typical rents nationwide slid for three straight months to close out 2022, but at $1,981, they are still up 7.4% year over year. 

Zillow will roll out a new Zillow Home Value Index, based on the more accurate neural Zestimate® model, in next month’s report. 

Metropolitan
Area*

December
Zillow
Home
Value
Index
(ZHVI)
(Raw)

Monthly
Mortgage
Cost (at
20%
Down)

Monthly
Mortgage
Cost
Change,
Year over
Year (YoY)

Monthly
Mortgage
Cost
Change,
Month
over
Month

Total
Inventory
Change,
YoY

Median
Days on
Market
Change,
YoY

Zillow
Observed
Rent
Index
(ZORI)

United States

$356,819

$1,795

62.5 %

-0.7 %

15.9 %

17

$1,981

New York, NY

$619,155

$3,105

58.4 %

-0.5 %

-8.7 %

4

$3,062

Los Angeles,
CA

$893,468

$4,512

52.4 %

-1.0 %

22.9 %

21

$2,917

Chicago, IL

$307,549

$1,552

57.8 %

-0.8 %

-12.5 %

12

$1,839

Dallas–Fort
Worth, TX

$382,179

$1,944

66.9 %

-1.1 %

11.9 %

13

$1,802

Philadelphia,
PA

$344,532

$1,724

60.9 %

-0.1 %

-5.3 %

7

$1,777

Houston, TX

$311,338

$1,573

64.4 %

-0.8 %

23.0 %

22

$1,654

Washington,
DC

$551,067

$2,770

55.0 %

-0.5 %

-0.4 %

17

$2,198

Miami–Fort
Lauderdale,
FL

$476,860

$2,391

79.9 %

-0.4 %

22.7 %

17

$2,771

Atlanta, GA

$380,619

$1,916

65.6 %

-0.8 %

21.3 %

26

$1,953

Boston, MA

$642,106

$3,230

56.2 %

-0.9 %

8.3 %

10

$2,874

San
Francisco, CA

$1,348,952

$6,832

47.2 %

-1.5 %

19.6 %

25

$3,100

Detroit, MI

$238,838

$1,198

57.0 %

-0.5 %

13.8 %

13

$1,421

Riverside, CA

$570,580

$2,888

58.1 %

-1.0 %

39.7 %

29

$2,514

Phoenix, AZ

$437,703

$2,225

53.1 %

-1.5 %

40.4 %

40

$1,882

Seattle, WA

$725,882

$3,761

54.4 %

-2.1 %

75.5 %

35

$2,166

Minneapolis–
St. Paul, MN

$370,054

$1,862

53.8 %

-0.7 %

5.9 %

18

$1,614

San Diego, CA

$865,499

$4,392

55.5 %

-1.4 %

32.9 %

23

$2,991

St. Louis, MO

$245,958

$1,236

60.2 %

-0.4 %

2.4 %

9

$1,291

Tampa, FL

$387,110

$1,951

75.4 %

-0.8 %

57.0 %

24

$2,093

Baltimore,
MD

$378,283

$1,903

57.2 %

-0.5 %

-6.5 %

10

$1,764

Denver, CO

$614,979

$3,107

56.2 %

-1.1 %

61.0 %

31

$1,970

Pittsburgh,
PA

$209,325

$1,050

51.5 %

-0.5 %

3.0 %

9

$1,328

Portland, OR

$556,622

$2,816

53.3 %

-1.1 %

29.0 %

32

$1,875

Charlotte, NC

$384,179

$1,936

69.0 %

-0.8 %

5.3 %

20

$1,781

Sacramento,
CA

$582,243

$2,950

51.4 %

-1.3 %

33.2 %

25

$2,264

San Antonio,
TX

$336,791

$1,703

63.6 %

-1.0 %

47.8 %

29

$1,481

Orlando, FL

$398,331

$2,008

74.4 %

-0.8 %

37.8 %

23

$1,996

Cincinnati,
OH

$267,706

$1,338

62.0 %

-0.2 %

-7.8 %

5

$1,516

Cleveland,
OH

$219,740

$1,101

60.8 %

-0.4 %

0.2 %

9

$1,331

Kansas City,
MO

$293,088

$1,469

61.9 %

-0.1 %

10.0 %

9

$1,356

Las Vegas, NV

$418,083

$2,101

57.2 %

-1.6 %

59.0 %

47

$1,800

Columbus,
OH

$304,421

$1,522

62.4 %

-0.6 %

14.1 %

9

$1,409

Indianapolis,
IN

$273,939

$1,378

65.0 %

-0.6 %

26.6 %

15

$1,443

San Jose, CA

$1,521,049

$7,724

50.9 %

-2.0 %

-11.0 %

6

$3,216

Austin, TX

$531,197

$2,700

47.2 %

-1.9 %

53.7 %

46

$1,869

Virginia
Beach, VA

$336,585

$1,687

61.2 %

-0.4 %

-9.4 %

7

$1,629

Nashville, TN

$446,141

$2,254

68.4 %

-1.2 %

69.0 %

33

$1,856

Providence,
RI

$446,479

$2,250

58.1 %

-0.8 %

-6.9 %

8

$1,899

Milwaukee,
WI

$275,271

$1,371

60.0 %

0.2 %

-34.4 %

0

$1,194

Jacksonville,
FL

$374,244

$1,884

72.7 %

-0.9 %

56.9 %

34

$1,757

Memphis, TN

$237,529

$1,192

65.0 %

-0.5 %

15.7 %

17

$1,481

Oklahoma
City, OK

$226,242

$1,132

65.4 %

-0.1 %

22.5 %

14

$1,306

Louisville, KY

$245,203

$1,231

59.9 %

-0.4 %

0.6 %

10

$1,281

Hartford, CT

$326,038

$1,628

62.1 %

0.1 %

-20.4 %

3

$1,667

Richmond,
VA

$347,267

$1,739

62.7 %

-0.4 %

7.9 %

9

$1,548

New Orleans,
LA

$266,726

$1,343

56.1 %

-0.8 %

52.1 %

28

$1,525

Buffalo, NY

$247,238

$1,234

59.7 %

-0.1 %

4.9 %

8

$1,218

Raleigh, NC

$433,424

$2,205

62.7 %

-1.9 %

46.0 %

$1,744

Birmingham,
AL

$252,018

$1,259

62.1 %

-0.3 %

29.0 %

18

$1,293

Salt Lake City,
UT

$569,969

$2,901

53.5 %

-1.5 %

90.8 %

34

$1,751

*Table ordered by market size 

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®; StreetEasy®; HotPads®; and ShowingTime+™, which houses ShowingTime®, Bridge Interactive®, and dotloop®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). 

 

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Mike McNamara

Mike McNamara

A Las Vegas Realtor since 2008. Mike has a wide range of knowledge around all things Las Vegas.

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