Property Values Decline For Second Consecutive Month – Zillow Report

Home prices fell for the second straight month, according to Zillow’s latest market report, as mortgage payments continue to discourage buyers.

Zillow also found that affordable markets remain competitive, with prices falling rapidly in both the more expensive and more expensive markets that rose the most during the pandemic. 

In addition to financial difficulties, recent changes in mortgage rates have made it difficult for many borrowers to qualify or even plan to purchase loans.

“The daily and weekly price swings mean that many potential buyers could benefit from a loan one week, but not the next or the next,” said Skylar Olsen, chief economist at Zillow. 

“Even buyers who can afford a home at current prices can get cold feet and wait for mortgage rates to drop significantly again, as they did recently. From June to mid-July, when rates fell 50 points in just two weeks.”

With the percentage of household income required to pay the monthly mortgage currently exceeding 30%, which is considered a financial drain, uncertainty can hit many people. 

Consumers who might be able to proceed with the loan. Olsen said the problem could persist until the market stabilizes and returns to normal. 

The average US home price fell 0.3% from July to August to $356,054, as measured by the Zillow Home Value Index.

This is the largest monthly decline since 2011 and follows a 0.1% decline in July. Appreciation has returned since the peak in April, but real estate values are still up 14.1% year on year and 43.8% since August 2019, before the pandemic.

The historic rise in home prices during this pandemic, combined with rising mortgage rates this year, has brought the monthly mortgage payment for a typical home, including insurance and taxes, to $1,643 from $897 in August 2019, an increase of 83%. 

Reduced competition with real estate in the market. The average time to quote is now 16 days, three days longer than in July – a significant increase from the average market at this time of year – and an increase from a shorter period of six days in April. 

Inventories rose 1% from July, but this was the smallest monthly increase since February. A sharp drop in the number of new listings on the market over the past two months suggests that the modest increase in overall sales is due to homes taking longer to sell, rather than sales activity. 

Zillow said mortgage rates of around 6% could discourage many homeowners from selling their current homes and entering the market as buyers.

Real estate values rose in 12 of the top 50 U.S. markets in July-August, led by Birmingham, Ala. (0.9%), Indianapolis, Indiana (0.5%), Cincinnati (0.4%), and Louisville (0.2%). 

All four have home values well below $300,000. Miami is breaking the trend at number five but also has had the strongest rental growth in the past three years, which may entice buyers to buy. In San Francisco, prices fell 3.4% for several months during the month.

About 28% of all national listings received discounts, up slightly from the August 2019 rate of 22%. Promotional stocks have the highest discounts in Salt Lake City, Utah; Phoenix, Arizona; Vegas; Austin, Texas. 

The markets with the lowest price drop rates are Milwaukee, Wisconsin; New York; Hartford, Connecticut; In Boston. 

Mortgage growth continued to slow in August, with rents now at $2,090, up 12.3% from August last year, from February’s peak of 17.2 % year-on-year. Annual rent growth was strongest in Miami (21.9%); New York (17.9%); Orlando Florida. (17.5%); in San Diego (17.1%).