Housing markets in the US are now more buyer friendly, latest research shows
Buyers in the United States are gaining more negotiating power as the housing market slows, especially in some of the nation’s hottest markets, new research has found.
Limited inventory and rapid price growth has been a characteristic of the property market for several years but now in 20 of the 35 largest metros, market conditions favour buyers more than they did a year ago.
The latest buyer-seller index from real estate firm Zillow, 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, has compared each metro across time, showing whether the market is cooler and thus favouring buyers, or hotter and favouring 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.
Indeed, in these two Bay Area markets, home prices are so prohibitive, the typical buyer must put more than a 20% down to keep mortgage payments at or below 30% of monthly household income.
San Jose buyers would need a 49% down payment, or $614,100, nearly three times as much as the national median home value. Some 43% of buyers in San Francisco, 43% in Los Angeles and 31% in San Diego would also need to put down more than 20%.
‘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,’ Olsen added.
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 favouring sellers over the past year, with homes selling about a week faster than they did a year ago.