San Antonio and Tampa saw the largest increases in housing inventory. (iStock)
Today’s home buying market is in the hands of sellers, competition remains fierce, and prices fluctuate. There are some states that are a bit more affordable than others. Zillow recently conducted a survey.
Cities in Texas and Florida dominate Zillow’s top 10 best places for homebuyers, with the two states making up seven of the 10 metro areas listed. These areas have a little less competition, especially thanks to new construction homes.
“Currently, potential buyers in most markets are not experiencing as much competition as they did during the recent spring shopping season, with pressure easing as mortgage rates drive up costs and sellers return,” said Skylar Olsen, chief economist at Zillow. “However, the number of homes for sale remains notably low, meaning the country remains a seller’s market despite high mortgage rates. Homes are selling faster than before the pandemic, and there is increased buyer interest in every property.”
Austin and San Antonio were two of the Texas markets that saw the biggest inventory gains this year. San Antonio home sales increased 27.4% and Austin inventory increased 11%.
In Florida, Tampa, Orlando and Jacksonville all added more housing inventory than the rest of the country. Tampa saw a 50.1% increase in listings, Orlando saw its inventory increase by 41.6% and Jacksonville saw its inventory increase by 37.2%.
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Most homeowners would rather renovate their home than buy another one: survey
Mortgage values also increased in other Southern and Midwestern states.
While states like Florida and Texas have it easy for homebuyers, homeowners in other Southern and Midwestern states are struggling to afford high mortgage payments, the ATTOM survey found. Home Equity Values and Home Equity Value Reports.
About 45.8% of mortgaged properties were considered highly capitalized in the first quarter, down from 46.1% in the fourth quarter of 2023.
Meanwhile, the percentage of mortgages considered seriously overdue has increased in the first few months of the year: ATTOM reports that 2.7% of mortgages in the U.S. are now overdue, up from 2.6% at the end of last year.
“Homeowners’ balance sheets continue to benefit greatly from the strong economic climate in the form of increased equity capital that can be used to finance everything from home renovations to business startups. But that windfall is starting to fade amid growing signs that the market is no longer so overheated,” said Atom CEO Rob Barber.
Southern states such as Kentucky saw the biggest quarterly declines, with homes considered valuable falling from 35.4% to 28.7% over the past few months.
South Carolina also saw a decline in the number of homes with high property values, from 42.4% to 40%. The other three states hardest hit by declining property values were Georgia, Delaware, and Indiana.
Nearly half of U.S. states saw an increase in the percentage of homes with high property values, but the increase was only about 1 percent. Many Western states and several Midwestern states also saw increases in property values: Hawaii’s percentage of homes with high property values increased from 55 percent to 56.5 percent, South Dakota’s increased from 49.8 percent to 51.5 percent, and Montana’s increased from 57.3 percent to 58.7 percent.
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Americans typically spend about 24% of their income on mortgage payments.
Lock-in effect reduces home sales by over 1 million
Existing home inventory has been declining for the past few years, primarily due to rising interest rates. This is because higher interest rates tend to motivate homeowners to stay in their homes, especially if they have locked in a low interest rate. Many owners are not willing to trade the low interest rates they enjoyed during the pandemic for rates approaching 7%.
This interest rate lock-in has created a vacuum in the housing market, with an estimated 1.3 million home sales lost between the second quarter of 2022 and the fourth quarter of 2023. According to a report from the Federal Housing Finance AgencyApproximately 182,490 of those sales took place in California alone.
The report found that “for every percentage point that market mortgage rates exceed lending rates, the likelihood of selling decreases by 18.1 percent.” As interest rates continue to rise, homeowners are holding on to their homes more and more.
With prices continuing to soar, interest rates rising and inventory levels dropping, the market is unlikely to turn around for buyers anytime soon.
“Mortgage rate trends are unlikely to break through the fixed rate effect until at least the end of the year, and possibly into 2025, as the Fed remains steadfast in its fight against inflation,” said Ralph McLaughlin, senior economist at Realtor.com. Predicted.
“To get there, the 10-year yield would need to fall by 150 to 200 basis points, but at current spreads, that could require three to four rate cuts from the Fed. Right now, the market is pricing in one to two cuts by the end of the year and two to three cuts in 2025,” McLoughlin said.
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Renting is slightly cheaper than buying, and Gen Z is renting more often than buying.
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