Zillow Finds Early Home Shopping May Pay Off

(Illustration courtesy of Zillow)

Both buyers and sellers should prepare for a competitive home shopping season this spring. Zillow’s latest market report shows that well-priced homes are being sold quickly, while those that linger on the market are seeing their asking prices cut.

“Some of the homes loitering on the market may just need the right buyer and digital curb appeal to cast a wider net, but many may be overpriced,” Zillow Chief Economist Skylar Olsen said. “There are slightly more homes for sale than this time last year, and there is still plenty of competition for well-priced houses.”

Olsen noted buyers should prep their credit scores and sellers should prep their properties now. “Attractive listings are going pending in less than a month, and time on market will shrink in the weeks ahead,” she said.

What Buyers are Seeing

Over 20% of homes on Zillow saw a price cut in January – about equal to last year, but more common than in the five preceding years. Those price cuts are bringing seller expectations more in line with current market conditions.

Shoppers already touring virtually and in person may be able to negotiate a deal, but that’s likely not the case in places where median time on market for sold homes has dropped the most since 2023. Las Vegas is down 32 days, Phoenix 30 days and Seattle 28 days.

So where are “deals” drying up, and where are they bountiful? Price cuts are much less common than a year ago in expensive Western metros: Austin, San Jose, Seattle and Las Vegas.

Price cuts are most prevalent in the Phoenix area, Florida and Texas markets, Zillow said. These are areas where total inventory is higher than before the pandemic – such as San Antonio and Austin – or where inventory declines are comparatively low.

There are a few more options available now than last year, Zillow reported. Total inventory is up more than 3% from a year ago, while the flow of new listings to the market is up nearly 6%.

Typically, January sees a significant jump in new inventory over December, and in 2024 that monthly boost was 43%. That was a relatively small increase when considering Januarys over the past few years.

What Sellers are Seeing

Sellers still have record home equity. The typical U.S. home value is up nearly $100,000 since 2020, now standing at $344,159. Annual appreciation is fairly healthy at 3.6%, and only three of the 50 largest U.S. metros saw home values fall over the year.

According to the most recent data available, more than a quarter of homes sold for more than asking price in December. That’s less than in the rate-fueled rush during the early pandemic, but slightly more than in December 2022 and far more than before the pandemic, when less than 20% of homes sold over asking price.

Metro areas where sellers are more numerous than last year are San Diego, Miami, and Riverside, with new listings up 28%, 22%, and 20% annually, respectively.

What to Expect in Coming Months

All of this highlights a relatively competitive home shopping season in which attractive listings are moving quickly. Demographic factors and a relatively strong economy equal vast numbers of millennials and baby boomers looking for houses, even while affordability is still extremely challenging.

Zillow recommends buyers get their credit in order, talk to a loan officer to understand their budget and search by monthly payment to make sure their search results stay within their budget, regardless of mortgage rate swings.

For sellers, it’s important to work with an agent who understands local market conditions and will price their home correctly, the report noted.