As the spring home shopping season heats up, buyers and sellers nationwide can expect very different experiences when it comes to negotiating power. According to the latest Zillow analysis of national buyers' and sellers' markets, sellers in the West will likely have the upper hand in negotiations when selling their home, while buyers in Midwestern and East Coast metros will likely face less competition and have more room for bargaining on prices.
In this analysis, a sellers' market is not necessarily one where home values are rising, but rather one in which homes are on the market for a shorter time, price cuts occur less frequently and homes are sold at prices very close to (or greater than) their last listing price. In buyers' markets, homes for sale stay on the market longer, price cuts occur more frequently and homes are sold for less relative to their listing price.
"The real estate data in markets on both coasts are telling markedly different stories. Relatively strong job markets in the West are helping spur robust demand, which is being met with limited supply, causing rapid home value appreciation and giving sellers an edge. In the East, housing markets are appreciating a bit more slowly, and homes are staying on the market longer, which helps give buyers the upper hand," said Zillow Chief Economist Dr. Stan Humphries. "In general, buyers in sellers' markets this spring can expect tight inventory, increased competition and a greater sense of urgency. Sellers in buyers' markets may need to be prepared to lower their asking price, or to wait longer for the perfect buyer to come along. As we put the housing recession further in the rear-view mirror, the broad-based dynamics that applied during those days, when all markets were reacting similarly to nationwide economic conditions, are fading. Real estate has always been local, and as the spring market gains momentum, this old adage will only become more pronounced."
The U.S. Zillow Home Value Index (ZHVI) inched up again last month, to $169,200, according to the February Zillow Real Estate Market Reports. But both monthly and annual U.S. home value appreciation slowed to their lowest paces in months. National home values were almost flat in February from January, and were up 5.6 percent from February 2013.
The pace of home value growth has slowed in recent months as more inventory of for-sale homes has helped meet demand. Nationwide, while inventory remains tight, the number of homes listed for sale on Zillow was up 5.5 percent annually in February. For the 12-month period from February 2014 to February 2015, national home values are expected to rise another 3 percent to approximately $174,285, according to the Zillow Home Value Forecast[v].
National rents rose in February from January, up 0.2 percent to a Zillow Rent Index (ZRI) of $1,310. Year-over-year, national rents were up 2.8 percent in January.