Many home buyers have struggled to find good deals on affordable homes in neighborhoods they like over the last few years. That’s because a seller’s market dominated most of the country. That, however, might be changing. A new report on national trends from real estate site Trulia reveals that for the first time in years, houses are listed on the market longer, they’re being sold for less than the asking price and price cuts are more common. The trend toward buyer relief is playing out across the nation, but some zip codes are witnessing a more dramatic shift than others. The results of this study could be important if you’re considering buying a home or selling one. It highlights where buyer-friendly trends are most evident, which could compel you to make your move sooner or later or to put it off altogether.
Buyer’s market emerges. The study shows that 50 of America’s 100 biggest metro area are shifting in favor of buyers—that’s a tenfold increase over only five areas just one year ago. Three major buyer/seller balance-of-power indicators—median days on the market, the percentage of listings with at least one price cut and median sale-to-list price ratio—all are swinging in favor of home buyers. What that means: When the number of median days on the market starts to increase, that means more homes are staying on the market longer, so supply increases and prices drop. More price cuts show that sellers are trying to stoke interest and stay competitive. And lower sale-to-list price ratios mean that more sellers are settling for less than the asking price. It’s important to note, however, that the study analyzes the market’s movement, not its current position, which is still heavily weighted toward sellers—for now, at least.
The shift is most dramatic in the priciest markets. Much of the drama is playing out on the West Coast, where home prices have long been among the highest in the nation, increasing by 50% over the last six years alone. Las Vegas experienced the most dramatic shift, moving from the number-three worst position for buyers out of the top 100 markets to the fifth-best position—that’s a swing of 93 spots out of 100. Expensive San Jose moved up 92 spots. And its Bay Area neighbor San Francisco—the epitome of an exclusive and red-hot real estate market—climbed 55 spots. Seattle jumped 74 spots, and Los Angeles jumped 46 spots, making it the 10th-best market for buyers in America. Home values in these markets climbed by 7.9% to 12.6% annually between 2013 and 2019. In the last year, however, that growth slowed to just 3% to 7% per year. Dallas and Denver, both longtime destination cities for people fleeing the West Coast, also shifted in favor of buyers but not by as much.
The same trend applies to individual neighborhoods. Just like metro regions that are pricey overall, expensive individual neighborhoods are also shifting in favor of buyers, even in relatively affordable metro regions. Philadelphia and Atlanta, for example, are markets that are within reach of much of the middle class. In those cities, the Zip codes where conditions are beginning to favor buyers the most tend to cover the most expensive neighborhoods in each metro region.
What it means for you:It is still a seller’s market in most of America, but conditions are showing signs of improvement for buyers, particularly for first-time buyers who aren’t looking to buy a home while also trying to sell one in a softening market. If you’re considering selling, particularly in an expensive metro or even an expensive neighborhood in an affordable metro, you might want to pull the trigger sooner rather than later as seller-friendly trends look like they’ll continue to erode. If you were priced out of a metro or neighborhood over the last few years, you might want to restart your search, as some of the least affordable parts of America are starting to soften up.