Homebuyers Emerging in Spring

HOUSTON – (By Dale King, Realty News Report) – Potential home buyers are popping up like spring crocuses as home sales tick up and price declines level off.  But potential spring-season sellers have yet to join the fray. The number of homes for sale is the second-lowest on record — meaning there’s stiff competition for well-priced homes, according to the latest Zillow market report.

What mortgage rates do next will have a huge impact on the market’s momentum, Zillow says. A real downtick in mortgage rates could prompt the market to explode like a burst of spring pollen on a sunflower.

Zillow says the value of a typical U.S. home remained nearly flat from December to January, slipping just 0.1 percent and resting at $329,542, or 4.1 percent below the peak value set in July 2022. Despite the recent drop, the value of American domiciles remains 6.2 percent higher than a year ago, and 39 percent above the price point before the pandemic.

The Texas Angle

How do the four major metros in Texas figure into this equation?

Austin, a longtime price leader, remains at the top, nearly $150,000 more than the Zillow home value index average for a home in the United States.

The market report says the January home value for an Austin domicile is $476,581. That’s down 1.1 percent year over year, and also down 1 percent month over month.

Folks looking for a home in Austin will have to pay a hefty mortgage rate, though. Zillow lists the monthly payment (with a 20 percent down payment) at $2,337, compared to the national figure of $1,595 a month. The Austin mortgage rate is up 29.1 percent year over year.

The inventory of homes in Austin is up 29.1 percent since January of 2020.

Next on the Lone Star State’s list is Dallas-Fort Worth, where the Zillow home value index lists the price of a home at $359,743, just a tad above the U.S. rate. The DFW home price is up 4.5 percent year over year, but down .7 percent month over month. The monthly mortgage payment on a home in Dallas and Fort Worth is $1,752, says Zillow, up 48.8 percent year over year.  The inventory of homes in DFW has fallen 35 percent since January 2020, says the Zillow report.

Houston reports in at third place on the Texas tally. Zillow says the January home value index of a Bayou City residence is $295,108, up 5.3 percent year over year, but down .7 percent month over month. A monthly mortgage payment for a resident of Houston is now $1,436, 45.9 percent more than a year ago.

The inventory of homes in Houston is down 25.3 percent from January 2020, reports Zillow.

Last on the Texas list is San Antonio, where the average home, according to Zillow’s home value index, costs $287,206. That’s up 5.3 percent year over year, but down .2 percent month over month. A mortgagee in San Antonio will have to cough up $1,393 a month to hang onto the home, up 45.1 percent year over year.

The inventory of homes in and around the Alamo City has slipped 11.2 percent since January of 2020.

Zillow says the number of people buying homes has increased since the fall and the first month of 2023 is looking like a normal, pre-pandemic January.

At a low point in November, newly pending listings were down 38 percent compared to one year earlier. In January, they were only down 20 percent from the previous year and were right in line with 2020.

Previously priced-out buyers were likely encouraged by mortgage rates that fell from a peak of 7.08 percent in November to 6.09 percent by Feb. 22 before ticking back up. This dramatically improved shoppers’ ability to buy.

A new mortgage for a typical home using a 5 percent down payment cost $2,310 in October; then fell to $2,100 by the end of January. But conditions are still far more challenging than they were before the pandemic — in January 2020, a monthly payment was $1,127.

But while buyers are returning to the market, homeowners are opting not to list their homes. The 230,000 new listings in January were by far the lowest total in Zillow records that begin in 2018: 17 percent fewer than the then-record low of January 2022 and 30 percent lower than the 2018–2021 average of about 330,000.

The 825,000 homes on the market in January was the second-lowest total in several years, and about 450,000 fewer than were ever on the market in January 2020.

This means competition for well-priced houses is stronger than before the pandemic, but don’t expect the widespread bidding wars of 2021 and early 2022.

It took a median of 31 days for a home to sell in January, indicating that buyer competition for attractive listings is livelier than pre-pandemic norms (more than 40 days to pending), but not as furious as in 2022 (nine days to pending) or 2021 (17 days to pending).

Zillow Informed

“Now as a buyer, you can slow down, have your inspection and make a strong, well-informed offer,” said Ryan Platzke, Realtor at Helgeson/Platzke Real Estate Group and member of Zillow’s Premier Agent program in Minneapolis. “And as a seller, you are still in a very good position; you won’t see the 10 offers all cash, noncontingent, etc. But you will see one, maybe three offers, usually that first or second weekend, where you’ll be able to select which one to go forward with and comfortably make a decision.”

This is the first monthly market report that refers to the newly launched version of the Zillow Home Value Index (ZHVI), now based on the neural network-driven Zestimates formula that Zillow produces for nearly every home in the United States. The new ZHVI, like the neural Zestimate, now better reflects seasonal changes; prices tend to trend up in the spring and down in the fall and winter.

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.

Feb. 26, 2023 Realty News Report Copyright 2023

Photo by  Ralph Bivins, Realty News Report Copyright 2023.


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FILE: Homebuyers Emerging in Spring

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