Shift to Buyer-Friendly Conditions Chipping Away at Sellers’ Years-Long Advantages

Trulia, San Francisco, said the transition from a sellers’ market to a buyers’ market is giving home buyers some relief, at the expense of home sellers and most noticeably in pricey areas where housing costs are still growing and affordability has eroded the most.

Trulia Housing Economists Felipe Chacón and Elliott Deal noted the years-long trend of declining days on market has come to a stop, price cuts are increasingly common and homes are more likely than in prior years to sell below their original list price.

“This national trend is also playing out locally, with the most expensive neighborhoods shifting most in favor of buyers,” the authors said. “Even so, affording a home and negotiating the most favorable deal may still prove challenging for many buyers–because despite these shifting conditions, most metro areas remain tilted heavily in sellers’ favor.

Key findings of the report (

–More metros are shifting in favor of buyers: 50 major metros are now showing signs of shifting in favor of homebuyers, up from five metros a year ago. “This is happening where home values have risen the most, signaling that these markets have hit an affordability ceiling,” Trulia said.

— The shift in favor of buyers is most dramatic in the West, particularly Las Vegas, San Jose and Seattle where home values have risen more than 50 percent over the past six years. Beyond the pricey West Coast, markets including Denver and Dallas–both often destinations for those moving away from the West Coast–have also shifted in favor of buyers over the past year, though less dramatically. But in the past year, this growth has slowed, suggesting that prices have exceeded what most buyers are able to or willing to pay for a home.

–Expensive neighborhoods are cooling, even in some inexpensive markets: Across markets nationwide, ZIP codes shifting the most towards a buyers’ market are, on average, the more expensive ones. This is apparent even in some metros that aren’t showing an overall shift in favor of buyers or sellers (Atlanta) or are generally shifting in favor of sellers (Philadelphia).

“Though sellers still largely have the upper hand, the U.S. housing market is gradually shifting in favor of buyers,” the authors said. “The shift in favor of buyers is also happening where home values have risen the most over the past six years, suggesting that these markets may have hit an affordability ceiling…prices have seemingly exceeded what most buyers are able or willing to pay, and with fewer willing and/or able buyers competing for homes, it’s harder for sellers to obtain their initial asking prices. This leads to longer days on market, more frequent price cuts and homes selling further below asking.”

The market shift toward buyers after a multi-year stretch favoring sellers, especially in more expensive metros and neighborhoods, is “welcome news” for many buyers, the report said, noting inventory is finally growing again in some of the tightest coastal markets, as buyers stop snapping up listings virtually as soon as they are advertised and some listings linger on the market.

“Because there are no clear rules or authority for officially calling a buyers’ or sellers’ market, both buyers and sellers should pay close attention to market cues,” the report said. “Even if a broader metro area doesn’t appear to be shifting in anyone’s favor, changes can be very different from neighborhood-to-neighborhood. Having an idea of these trends can greatly help inform the degree to which buyers and sellers have leverage in a given deal.”