Real Estate Data Shows Affordability Challenges Are Keeping Demand In Check

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  • The housing market cooled off in December due to affordability issues, but mortgage rates were slightly lowered.
  • List prices are now more indicative of sale price and 28% of homes nationwide sold above their first list price in November – the lowest since June 2020.
  • Mortgage costs for a typically valued home after a 20% down payment is just under $1,800 per month and 62% higher than last December.
  • Sales measured by Zillow’s nowcast were down 33% year over year while total inventory rose 16%.
  • New listings have declined compared to 2019 for eight consecutive months while typical rents increased by 7.4%.

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.”

READ:  Local Home Sales Down by 17% in 2022, Are Interest Rates to Blame?

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.

READ:  Pennsylvania's Median Home Sales Price Drops 11% in December

Zillow announced it 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 % $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

READ:  Pennsylvania's Median Home Sales Price Drops 11% in December
*Table ordered by market size

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