Zillow Group Stock Price, News & Analysis

Zillow Home Loans reports that 15% more borrowers purchased mortgage points in 2022 than in 2021 as interest rates hover around 6%. Nearly 45% of conventional primary home borrowers opted for points to lower monthly payments. This reflects a significant increase from 29.6% in 2021 and a consistent rise from 27.3% in 2019. In cash-out refinance scenarios, 57.8% of borrowers chose to buy points in 2022. Buyers with lower incomes are more likely to purchase points, particularly for homes in the top and middle price tiers. As home values remain about 25% above historical affordability norms, the strategy of buying points is becoming more prevalent among those seeking to ease monthly financial burdens.

The latest Zillow analysis, dated April 20, 2023, reveals significant trends in the housing market, particularly for entry-level home buyers. Notably, the least-expensive one-third of homes experienced a remarkable 8% annual price increase, amounting to nearly $13,000. In contrast, the most expensive homes faced a 1% depreciation, marking the first decline in over a decade. This year, entry-level buyers are encountering fierce competition and limited inventory, with only a 1% increase in lower-tier homes compared to up to 13% for higher tiers. Mortgage interest rate hikes are exacerbating affordability issues, particularly in expensive markets like San Francisco and Seattle, where values fell by 14% and 11% respectively. Overall, newcomers should prepare for potential bidding wars amid rising prices and tight inventory.

The latest Zillow survey reveals that over half of Gen Zers (52%) and millennials (57%) believe they would need to win the lottery to afford a home, reflecting the daunting challenges of current housing affordability. The survey indicates that 95% of Gen Z and 94% of millennials would need to make significant lifestyle changes to pursue homeownership. The housing affordability crisis has worsened, with home values rising by 3% year-over-year and mortgage payments averaging $431 more than last year. As they face a typical down payment of around $67,000, many are optimistic about buying a home within five years. The survey highlights the gap between aspirations and reality for younger generations, emphasizing the need for financial strategies and resources, such as Zillow's tools for down payment assistance and mortgage calculations.