Rate lock is losing its grip on homeowners
- Twenty-one percent of homeowners surveyed by Zillow are
considering selling, up from 15% one year ago.
- Monthly mortgage payments, down $143 from October peaks, are (technically)
affordable again.
- Recovering inventory levels are far below pre-pandemic norms,
and competition for listings is still stiff.
SEATTLE, Jan. 16,
2024 /PRNewswire/ -- Buyers are getting some
much-needed relief, and more homeowners appear to be breaking free
of "rate lock," according to the latest monthly
report1 from Zillow®. Yet despite improvements in
inventory, competition for homes is still relatively stiff.
"Buyers found significant savings as rates fell. But mortgage
rates are fickle things, as we've seen in recent weeks, and they'll
play a massive role in determining appreciation and affordability —
especially for first-time buyers — going forward in 2024,"
said Skylar Olsen, Zillow chief economist. "Fortunately, rate
lock appears to be wearing off for some homeowners, who show
encouraging signs that they're ready to come back to the
market."
A recent Zillow survey of homeowners found that 21% are
considering selling their home within the next three years. That's
up from 15% a year ago.
The survey, fielded in Q4 of 2023, also found that the share of
homeowners considering selling was almost the same whether they had
a mortgage rate above or below 5%.
That's a big change from six months ago, when homeowners with
rates above 5% were nearly twice as likely to consider
selling.
The survey data shows that more owners with low rates are
warming up to the idea of selling, while those with higher rates
probably purchased their house fairly recently. Current mortgage
rates look to be less of a determining factor when considering a
sale.
A home purchase becomes affordable* again
Monthly
payments for a new mortgage on a typical home are now $1,790 — that's $143 less than in October. The drop has brought
affordability back to home buying — by some definitions. For the
first time since April, a new mortgage at 20% down now takes less
than 33% of the median household income2. But that's a
national average. Prices are so high that the median household
can't even qualify for a mortgage in many expensive metros. A 20%
down payment is a high bar, too, especially for first-time buyers.
Half of all buyers put less money down, and half of first-time
buyers use either a gift or a loan from family or friends to fund
their down payment.
The financial decision to buy or rent in 2024 won't be one
to take lightly. Those on the fence will need to answer some
probing questions about their own savings and investment prowess,
expectations for the market and how long they want to stay in one
spot.
Inventory improves
Inventory continues to make
slogging progress out of its pandemic hole. Inventory made its
first annual gains since April, and levels are now 36% below
pre-pandemic averages, an improvement over the 46% deficit seen in
May.
The flow of new listings to the market is slightly better than a
year before, and although levels are 14.5% below pre-pandemic
norms, they seem to be trending in the right direction. Time will
tell if that progress continues in 2024.
Competition continues
A lack of choices means buyers
are unlikely to find price cuts, and they should expect competition
for the most attractive listings. Price cuts are never popular in
the winter, and this December, the share of listings with a price
cut was just under 16% — the lowest since April 2022.
Although the market has cooled from the demand-fueled peaks of
2021 and 2022, listings are still going under contract in about a
month — 50% faster than pre-pandemic norms. The latest Zillow data
shows that nearly 30% of homes nationwide are selling for more than
their original list price, compared to about 20% in 2018 and
2019.
Metropolitan
Area*
|
December
Zillow Home
Value Index
(ZHVI)
(Raw)
|
ZHVI
Change,
Year
over
Year
(YoY)
|
ZHVI
Change,
Month
over
Month
(MoM)
|
Median
Days to
Pending
|
Share of
Listings
with a
Price
Cut
|
New
Inventory
Change
Since
Before
Pandemic
|
Total
Inventory
Change
Since
Before
Pandemic
|
United
States
|
$344,000
|
3.2 %
|
-0.6 %
|
30
|
15.6 %
|
-14.5 %
|
-36.0 %
|
New York, NY
|
$632,700
|
5.1 %
|
0.2 %
|
39
|
8.0 %
|
-37.3 %
|
-52.5 %
|
Los
Angeles,CA
|
$906,427
|
6.3 %
|
-0.4 %
|
22
|
11.6 %
|
-25.3 %
|
-42.6 %
|
Chicago, IL
|
$302,038
|
5.9 %
|
-0.7 %
|
22
|
15.5 %
|
-12.6 %
|
-50.4 %
|
Dallas, TX
|
$363,613
|
-0.5 %
|
-0.7 %
|
34
|
20.3 %
|
-11.0 %
|
-21.3 %
|
Houston, TX
|
$298,897
|
-0.4 %
|
-0.6 %
|
39
|
17.3 %
|
-9.3 %
|
-20.1 %
|
Washington,
DC
|
$539,996
|
3.6 %
|
-0.3 %
|
17
|
15.4 %
|
-26.2 %
|
-46.7 %
|
Philadelphia,
PA
|
$343,986
|
6.8 %
|
-0.4 %
|
17
|
16.7 %
|
-16.5 %
|
-49.0 %
|
Miami, FL
|
$475,927
|
6.7 %
|
0.1 %
|
37
|
16.4 %
|
-6.4 %
|
-29.1 %
|
Atlanta, GA
|
$371,691
|
3.3 %
|
-0.4 %
|
33
|
17.6 %
|
-22.7 %
|
-29.1 %
|
Boston, MA
|
$654,752
|
7.5 %
|
-0.5 %
|
15
|
9.8 %
|
-15.5 %
|
-46.4 %
|
Phoenix, AZ
|
$445,772
|
1.4 %
|
-0.5 %
|
41
|
19.7 %
|
-23.8 %
|
-22.2 %
|
San Francisco,
CA
|
$1,097,441
|
0.6 %
|
-1.0 %
|
32
|
9.6 %
|
-25.2 %
|
-17.7 %
|
Riverside,
CA
|
$561,697
|
4.0 %
|
0.0 %
|
29
|
14.2 %
|
-23.8 %
|
-41.3 %
|
Detroit, MI
|
$236,823
|
5.2 %
|
-1.0 %
|
21
|
16.9 %
|
-14.7 %
|
-38.0 %
|
Seattle, WA
|
$698,469
|
1.9 %
|
-0.5 %
|
27
|
14.6 %
|
-32.5 %
|
-35.6 %
|
Minneapolis,
MN
|
$357,009
|
1.4 %
|
-1.1 %
|
40
|
15.2 %
|
-16.4 %
|
-35.9 %
|
San Diego,
CA
|
$900,045
|
8.4 %
|
-0.2 %
|
22
|
15.3 %
|
-31.3 %
|
-51.6 %
|
Tampa, FL
|
$374,283
|
2.2 %
|
-0.3 %
|
33
|
23.3 %
|
-14.6 %
|
-13.0 %
|
Denver, CO
|
$567,674
|
0.6 %
|
-0.6 %
|
34
|
16.5 %
|
-32.5 %
|
-21.9 %
|
Baltimore,
MD
|
$368,426
|
4.0 %
|
-0.6 %
|
17
|
19.0 %
|
-10.5 %
|
-51.6 %
|
St. Louis,
MO
|
$238,853
|
5.3 %
|
-0.7 %
|
16
|
16.9 %
|
-14.8 %
|
-49.8 %
|
Orlando, FL
|
$386,525
|
3.0 %
|
-0.3 %
|
29
|
20.2 %
|
-4.2 %
|
-10.2 %
|
Charlotte,
NC
|
$368,501
|
2.8 %
|
-0.5 %
|
26
|
15.4 %
|
-10.3 %
|
-12.2 %
|
San Antonio,
TX
|
$280,461
|
-3.3 %
|
-1.0 %
|
49
|
20.3 %
|
-0.9 %
|
7.6 %
|
Portland, OR
|
$529,358
|
1.0 %
|
-0.7 %
|
36
|
15.5 %
|
-28.4 %
|
-26.5 %
|
Sacramento,
CA
|
$556,932
|
1.1 %
|
-0.6 %
|
24
|
14.8 %
|
-33.7 %
|
-41.2 %
|
Pittsburgh,
PA
|
$202,560
|
4.3 %
|
-1.0 %
|
26
|
16.9 %
|
-6.4 %
|
-41.6 %
|
Cincinnati,
OH
|
$268,481
|
5.3 %
|
-0.7 %
|
15
|
17.1 %
|
-6.9 %
|
-38.6 %
|
Austin, TX
|
$450,888
|
-7.2 %
|
-1.0 %
|
68
|
17.1 %
|
-16.5 %
|
26.1 %
|
Las Vegas,
NV
|
$408,719
|
1.5 %
|
0.1 %
|
32
|
16.8 %
|
-34.2 %
|
-38.4 %
|
Kansas City,
MO
|
$287,709
|
4.8 %
|
-0.8 %
|
16
|
18.4 %
|
-15.5 %
|
-45.2 %
|
Columbus, OH
|
$297,299
|
5.3 %
|
-0.8 %
|
16
|
20.0 %
|
-9.2 %
|
-34.1 %
|
Indianapolis,
IN
|
$266,000
|
2.0 %
|
-0.8 %
|
28
|
21.8 %
|
-6.2 %
|
-21.7 %
|
Cleveland,
OH
|
$213,138
|
6.2 %
|
-0.8 %
|
16
|
18.7 %
|
-15.7 %
|
-53.7 %
|
San Jose, CA
|
$1,472,791
|
6.5 %
|
-0.4 %
|
19
|
10.2 %
|
-9.9 %
|
-36.6 %
|
Nashville,
TN
|
$426,745
|
0.3 %
|
-0.6 %
|
35
|
19.8 %
|
-21.6 %
|
-25.9 %
|
Virginia Beach,
VA
|
$333,766
|
5.6 %
|
-0.3 %
|
33
|
18.4 %
|
-13.0 %
|
-52.1 %
|
Providence,
RI
|
$453,543
|
7.9 %
|
-0.4 %
|
20
|
13.8 %
|
-32.4 %
|
-65.0 %
|
Jacksonville,
FL
|
$352,076
|
-0.5 %
|
-0.4 %
|
43
|
19.9 %
|
-0.1 %
|
-16.3 %
|
Milwaukee,
WI
|
$320,624
|
7.9 %
|
-1.1 %
|
33
|
14.3 %
|
-5.5 %
|
-29.2 %
|
Oklahoma City,
OK
|
$225,239
|
3.2 %
|
-0.4 %
|
29
|
19.4 %
|
8.2 %
|
-13.5 %
|
Raleigh, NC
|
$430,048
|
1.3 %
|
-0.6 %
|
28
|
19.5 %
|
-17.4 %
|
-24.5 %
|
Memphis, TN
|
$231,380
|
-0.2 %
|
-0.5 %
|
35
|
18.6 %
|
-19.7 %
|
-7.0 %
|
Richmond, VA
|
$350,497
|
4.8 %
|
-0.2 %
|
14
|
16.6 %
|
-16.8 %
|
-53.5 %
|
Louisville,
KY
|
$244,786
|
4.2 %
|
-0.6 %
|
18
|
20.4 %
|
-11.4 %
|
-36.6 %
|
New Orleans,
LA
|
$234,383
|
-8.1 %
|
-1.1 %
|
46
|
15.0 %
|
32.0 %
|
41.8 %
|
Salt Lake City,
UT
|
$524,982
|
0.6 %
|
-0.7 %
|
35
|
20.8 %
|
-23.2 %
|
-16.1 %
|
Hartford, CT
|
$337,533
|
11.7 %
|
-0.3 %
|
9
|
12.8 %
|
-5.2 %
|
-69.6 %
|
Buffalo, NY
|
$243,750
|
6.2 %
|
-1.1 %
|
18
|
12.5 %
|
-22.1 %
|
-49.2 %
|
Birmingham,
AL
|
$245,269
|
0.7 %
|
-0.9 %
|
28
|
15.2 %
|
8.5 %
|
-22.9 %
|
*Table ordered by market size
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.
2 Definitions of affordability vary, and what's
affordable varies by household. Housing payments taking more than
30% of median household income have been noted by Zillow as a
housing burden, leaving less money available for other necessities.
Another common measure of affordability is for housing costs to
require less than one-third of a household's income.
About Zillow Group:
Zillow Group, Inc.
(NASDAQ: Z and ZG) is reimagining real estate to make home a
reality for more and more people. As the most visited real estate
website in the United States,
Zillow and its affiliates help people find and get the home they
want by connecting them with digital solutions, great partners, and
easier buying, selling, financing and renting
experiences.
Zillow Group's affiliates, subsidiaries and brands include
Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out
East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and
Follow Up Boss®.
All marks herein are owned by MFTB Holdco, Inc., a Zillow
affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS
#10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a
Zillow affiliate.
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SOURCE Zillow