Housing market heats up (or cools down) – depending on where you live

Inventory shortages fuel competition in coastal markets while Southern metros ease

Housing market heats up (or cools down) – depending on where you live

The spring home shopping season is shaping up to be a tale of two markets, with some regions seeing intense competition for scarce listings while others experience more balanced conditions.

Inventory remains the critical factor influencing competition and price growth, according to Zillow’s latest market report.

“Shoppers in the market today should expect competition, especially for attractive listings on the lower end of the price range — a rare opportunity these days,” said Zillow chief economist Skylar Olsen. “That’s kept prices ticking upward in most areas, despite affordability challenges.”

Homes are appreciating the fastest in costly coastal California metros and Seattle. San Jose leads the pack with a 3.3% increase, followed by San Francisco, Seattle, San Diego, and Los Angeles, all showing price growth of 2% or more.

These are also the markets where the highest share of homeowners is locked into low mortgage rates, making it much more expensive for buyers to enter.

“In costly areas, homeowners hold extensive mortgage debt at previously low rates, and the pressure is dialed up even further,” Olsen said in the report.

Bidding wars are common in these high-cost regions, ranking among the top 10 for the share of homes sold over the asking price in February. Inventory remains constrained compared to pre-pandemic levels.

Home price growth is more subdued in Southern metros like New Orleans, San Antonio, Tampa, Orlando and Jacksonville, with monthly growth of just over 0.5%.

“There are places where new construction relieved some pressure, and homeowners are less locked into their mortgage,” Olsen noted.

Nationwide, the disparity between hot and cold listings persists. In many markets where inventory has recovered, buyers are gaining more negotiating power, with homes selling slightly slower than in the pandemic-era frenzy. However, well-priced, attractive listings are still moving quickly, often within a week.

While buyers can expect intense competition in April and May, other listings are languishing, with the median age of listings on Zillow reaching 43 days.

Read next: Gen Z remains hopeful about buying homes despite affordability issues

Affordable Midwestern markets and expensive coastal metros like Seattle and Washington, D.C. show the shortest time-on-market for sold listings. In 17 major metros, sold homes were listed for a week or less.

Price cuts tell a similar story: Over 20% of sellers cut their list price in March, the highest percentage for this time of year in over a decade. Markets with the most common price cuts included: Tampa, Phoenix, Jacksonville, San Antonio, and Orlando.

However, nearly 27% of homes sold over the asking price in February, compared to less than 19% in 2019, indicating strong demand for desirable listings.

“Sellers who price their home correctly and amp up their real and digital curb appeal shouldn’t have a problem cashing out and moving on,” the report read.

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