A new report from Zillow found that inventory is a critical factor in how hot individual markets are, with West Coast hubs feeling the biggest burns.
Home values are rising the most in expensive cities, concentrated on the West Coast. Home price appreciation is up 3.3% month-over-month in San Jose, the highest of any city.
Seattle, San Francisco, San Diego, and Los Angeles followed it, all experiencing 2% or higher appreciation from February.
“[Competition] has kept prices ticking upward in most areas, despite affordability challenges. There are places where new construction relieved some pressure, and where homeowners are less locked into their mortgage, but not in the nation’s most expensive metros. In costly areas, homeowners hold extensive mortgage debt at previously low rates, and the pressure is dialed up even further,” said Skylar Olsen, Zillow’s chief economist.
Homeowners who locked in historically low rates during the pandemic are loathe to move on to today’s near-7% rates. Monthly housing payments hit another all-time high recently as rates moved up while home prices skyrocketed.
“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,” Olsen added.
More than 1 in 5 sellers slashed prices in March, however, the biggest share in more than ten years. Many Americans remain priced out of the market and are waiting for rates to move lower later in the year. Sellers who don’t have time to wait are looking for ways to grab buyers’ attentions.
Millennials who can’t afford a home are instead giving their rental properties makeovers, investing in renovation rather than saving for a down payment.
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