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
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(NASDAQ: Z and ZG) is reimagining real estate to make it easier to
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SOURCE Zillow