Home Values on the Decline along with Competition

According to a recent market report from Zillow, home values slipped for the second consecutive month as mortgage costs continue to sideline buyers. Affordability is driving market momentum. Low-cost markets remain competitive while prices drop the fastest in both the most expensive markets and those that witnessed the strongest appreciation during the pandemic.

The typical home value fell 0.3% from July to August and now stands at $356,054, as measured by the Zillow Home Value Index. That’s the largest monthly decline since 2011 and follows a 0.1% decrease in July. Appreciation has receded since peaking in April, but typical home values are still up 14.1% from a year ago and 43.8% since August 2019, before the pandemic.

Typical mortgage payments show an even starker picture of the astronomical growth of expenses for new homeowners over the past three years. The historic rise in home prices over the pandemic combined with this year’s spiking mortgage rates have pushed the monthly mortgage payment on a newly-purchased typical home, including insurance and taxes, from $897 in August 2019 to $1,643 – an 83% increase.

Reduced competition has homes lingering on the market. Typical time before a listing goes pending is now 16 days, three days more than in July — a steeper increase than the market usually sees this time of year — and up from an all-time low of six days in April.

Inventory ticked up, rising 1% from July. But that’s by far the smallest monthly increase since February. A significant decline in the flow of new listings to the market over the past two months indicates that the slight rise in total inventory is the result of homes taking longer to sell, rather than extra selling activity. Mortgage rates hovering around 6% are likely dissuading many owners from selling their current homes and entering the market as buyers.

The market continues to shift and change around the US. If you’re one of the lucky would-be buyers who doesn’t have a strict timeline, now could be a great time to start looking for the home of your dreams. There’s less competition and more choices, and while mortgage rates are on the rise, there are still affordable options out there. Contact Metrowest today and let’s discuss your options!