Buyers gaining time and options as competition eases

Rhea-AI Summary

According to Zillow's latest market report, affordability challenges are intensifying as home values and rental prices rise. Monthly mortgage payments are over 75% higher than in June 2019, with the typical U.S. home value reaching $354,165. Annual home value appreciation has eased to 19.8%, while rents surpassed $2,000 for the first time, marking an increase of 24.6% since 2019. Inventory levels are recovering, giving buyers more options and less competition. However, high costs are causing sales pullbacks in expensive metro areas, with listings in cities like San Jose and Seattle dropping significantly.

Positive

• Increased home inventory, providing buyers more options.
• Median time on the market has increased, allowing buyers more time to evaluate homes.
• The share of listings with price cuts is rising, indicating potential savings for buyers.

Negative

• Monthly mortgage payments are more than 75% higher than in June 2019.
• High costs are causing significant sales pullbacks in expensive metro areas like San Jose (-24.3%) and Seattle (-23.9%).
• Annual rent growth has eased, yet typical U.S. rents now exceed $2,000 for the first time.

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).

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/buyers-gaining-time-and-options-as-competition-eases-301588740.html

SOURCE Zillow

FAQ

What impact does the latest Zillow report have on home values?

Home values have seen a slight decline in expensive metros, with annual appreciation easing to 19.8%.

How much have mortgage payments increased since 2019?

Monthly mortgage payments are more than 75% higher now compared to June 2019.

What is the typical U.S. rent as of July 2022?

The typical U.S. rent has surpassed $2,000 per month for the first time, marking a 24.6% increase since June 2019.

How is inventory affecting the housing market?

Inventory levels are increasing, leading to more options and less competition for buyers.

What cities are experiencing the largest drop in home sales?

San Jose, Seattle, and Salt Lake City are seeing the fastest drops in newly pending sales.